Nati Harnik/AP Photo
USPS awarded a ten-year contract worth up to $10 billion to Oshkosh Defense, a subsidiary of the Oshkosh Corporation, to build postal vehicles.
This afternoon, the Senate begins debate on the Postal Service Reform Act, a bill that once and for all would end the absurdity of the U.S. Postal Service, unlike any public agency or private business, having to prefund retirement benefits 75 years out. Between that and enrolling postal retirees in Medicare, the bill would save the agency about $50 billion over ten years, while also mandating delivery performance standards. The bill earned 344 votes in the House, and the Senate companion has 14 Republican co-sponsors, so it’s likely to pass.
But a separate fight over a contract for the Postal Service’s next-generation delivery vehicles (NGDVs), and where they will be built, could affect this legislation, as well as economic development in the Midwest, the Biden administration’s climate goals, and a high-profile Senate race in Wisconsin.
A year ago, the USPS awarded a ten-year contract worth up to $10 billion to Oshkosh Defense, a subsidiary of the Oshkosh Corporation, founded in 1917 in Oshkosh, Wisconsin. The defense unit would build the new fleet of postal vehicles, with an initial order of 5,000 trucks that could ramp up to 165,000.
The Biden administration envisioned this as a fleet of zero-emissions electric vehicles, part of its green-energy procurement strategy. By 2035, the U.S. fleet is supposed to be all-electric.
But the Postal Service, an independent agency that doesn’t have to abide by the executive order, decided to have Oshkosh deliver gas-powered trucks to replace 90 percent of one of the largest vehicle fleets in the world. Only 10 percent would be electric.
At a USPS Board of Governors meeting this week, Postmaster General Louis DeJoy blamed the decision on the agency’s “dire financial condition.” Of course, staying with inefficient gas-powered vehicles, with an estimated fuel economy of only 8.6 miles per gallon when the air-conditioning’s running, would cost billions more to fuel in the long run. For the up-front investment, the Build Back Better Act earmarked $6 billion for postal electric vehicles, but that bill has stalled.
The Oshkosh vehicles would benefit from a loophole by weighing just enough to count as a “heavy-duty truck,” enabling them to have lower fuel economy standards than an SUV. Even so, the Environmental Protection Agency and the White House Council on Environmental Quality have argued that the USPS decision violates federal environmental laws. The fight could end up in court. And it could also bear on DeJoy’s future as postmaster general, even though he maintains the support of a majority of the Board of Governors.
Oshkosh Defense plans to move the facility producing the vehicles to the anti-union state of South Carolina.
But separate from this is another issue: Oshkosh Defense plans to move the facility producing the vehicles to the anti-union state of South Carolina, away from the United Auto Workers–organized employees of Oshkosh in northeastern Wisconsin.
Oshkosh told UAW workers for years that the USPS contract would not be through Oshkosh Defense, whose facilities are based in Wisconsin. When it was awarded to the defense unit, though, they assumed it would be located in their community. “When this first came out, the feedback from our members was, ‘Hey, ten-year contract, this will get me to retirement,’” said Tim Jacobson, a painter and chief steward of UAW Local 578.
Ultimately, that plan changed. Members had to find out through the media that Oshkosh was outsourcing the work to South Carolina. “Once it got awarded to Oshkosh Defense, we weren’t told the complete facts,” said Bob Lynk, president of Local 578.
Both Lynk and Jacobson testified before the USPS Board of Governors last week, urging them to work with Oshkosh Defense to keep the plant in Wisconsin.
In recent statements, Oshkosh has said that the facility where it’s planned to do the work, a former Rite Aid warehouse in Spartanburg, South Carolina, “ranked highest in meeting the requirements of the NGDV program.” At the same time, Oshkosh has said that it “could not identify an existing building that was viable” in Wisconsin for the project, and just last week the company said “our existing facilities in Oshkosh are fully occupied.”
But workers told the Prospect that two facilities in Oshkosh are lying empty right now. Union membership has been cut in half over the past decade, and shifts and hours have also been cut, so there’s a workforce that’s available and eager to build the truck. Meanwhile, the new plant in South Carolina wouldn’t be up and running until next spring.
Lynk, the local president, said that Oshkosh has claimed they need a building big enough for an in-house warehouse to store parts, but that has never been how the company has operated. “We’ve built trucks here for 100 years, 84 of them unionized,” Lynk said. “We can build in our South plant facility. But that building would have to be UAW workers.” The Spartanburg facility would not, and the federal contract does not stipulate that the vehicles must be built with union labor.
Union steward Jacobson added that he’s been painting prototype parts for the vehicles, and tool and die makers have been creating some of the tooling. But all of that would be shipped to South Carolina. A technical center for the NGDV program, located in Oshkosh, will employ around 100 workers. But the plant would have over 1,000, and because other businesses would supply the truck factory, the economic impact could be three to four times greater than that of the plant itself.
Meanwhile, Oshkosh Corp. received $8 million in state tax credits four years ago to keep their headquarters in the city.
Labor leaders argue that the USPS contract with Oshkosh was signed on the basis of the current unionized workforce.
The issue has spilled out into a critical Senate race in Wisconsin. Sen. Ron Johnson (R-WI), who is up for re-election in November, lives in Oshkosh, but has refused to get involved in the controversy, arguing that Oshkosh knows best where to locate the plant. “It’s not like we don’t have enough jobs in Wisconsin,” Johnson said. Not surprisingly, his political opponents have been pummeling him with those words ever since.
“You’re talking about a $10 billion investment in a community of 60,000; this would be transformative,” said Tom Nelson, Outagamie County executive and one of several Democrats vying to face Johnson in November. “The way this industry works, it has dozens of companies in its supply chain, a lot of them in the I-41 corridor, an area that covers 30 percent of the state’s population. What’s really frustrating here, people like Ron Johnson, even though he’s a self-touted manufacturer, wouldn’t know economic development if it bit him on the back end.”
All four major Democrats running in the August primary have condemned Johnson’s comments and asked Oshkosh to keep the plant in Wisconsin. Johnson’s Democratic counterpart in the Senate, Tammy Baldwin, has also been vocal. But Nelson, who faces three main competitors in August’s primary, is calling for an amendment to the postal reform bill to ensure that the Oshkosh contract honors its current collective-bargaining unit and stays in Wisconsin.
That’s not likely to happen, because the bill’s bipartisan agreement, which took over a decade to negotiate, is precarious, and Republicans would be liable to oppose any amendment that improved the labor situation. Democrats have an interest in keeping Johnson in the spotlight, however. Since his comment about having enough jobs in Wisconsin, he’s gone on local radio to do damage control, accusing Democrats and labor of working to “kill the Oshkosh contract.” But Johnson also said he would work with the UAW in Oshkosh, a sign that he’s feeling the heat locally.
Labor leaders argue that the USPS contract with Oshkosh was signed on the basis of the current unionized workforce. “The contract was awarded to Oshkosh, off the backs of our workforce, our workmanship, our on-time delivery,” said Bob Lynk. “They pushed our facilities. They get the contract and then tell everybody, ‘We’re doing it in South Carolina.’”
Oshkosh, which didn’t respond to a request for comment for this story, has said that it could build the vehicles all-electric if asked. Its contention appears to be more with the cost of union labor. Nelson argued that this is an effort to split the “blue-green coalition” that has been at the heart of efforts to ensure the energy transition brings with it good-paying jobs.
“They’re trying to take the environmental issue and drive a stake through the labor movement,” Nelson said. “They are using this to divide Democrats from labor.”
