Continental Tire North America Inc. (CTNA) will cease tire production at its Mayfield passenger and light truck tire plant by year-end but still maintain mixing and warehouse operations at the 44-year-old facility.
Conti blamed high operating costs for the decision, saying it had weighed options at the factory for some time. Tire manufacturing will end in Mayfield by Dec. 31, putting about 715 hourly and 112 salaried workers out of jobs. The company said it will work with the appropriate agencies to ease the transition for laid-off workers.
``We must remain cost-competitive in the market and our industry,'' Martien de Louw, CTNA president and CEO, said in a statement. ``Unfortunately this was our only option, as Mayfield remains the highest cost plant for Continental.''
Plant Manager Hank Eisenga said about 130 workers will be needed to staff the mixing and warehouse operation that will remain. The facility will supply other Conti tire plants with mixed rubber. Though most of those plants have some mixing capability, he said there still is a demand for the amount of rubber being mixed in Mayfield.
Opened in 1960, the Mayfield factory at one time employed more than 2,400, and as recently as early 2002 the plant still had 1,350 employees and produced 20,000 tires a day.
But it has been the target of cutbacks since that time. In December, Conti laid off 200 and trimmed production to nearly 10,900 units daily. And in May, it announced plans to cut another 200 jobs and bring daily production to just 7,300 tires.
Conti will shift the tire production to other North American plants. The company also has committed $305 million over four years to build a new tire plant in Brazil and to expand its Continental Sime Tyre operations in Malaysia. Both facilities will make tires for North America.
One analyst estimated the Mayfield cutback will bring closing costs of $145 million, with a payback period of about four years. With the action, Nicolas Hirth of Morgan Stanley Equity Research Europe projected Conti will break even in North America by late 2005.
With the recent history of cutbacks at Mayfield, Terry Beane, president of United Steelworkers Local 665, which staffs the plant, said there had been a fear that the facility would be closed, but the actual announcement was ``still very devastating to the workers.''
Mr. Beane said one reason for the higher costs in Mayfield is that it has been used as a ``swing plant'' to make a lot of different sizes and tires.
Mr. Eisenga, plant manager in Mayfield for two years, said there had been a lot of work done to try to make the operation more cost-effective. ``There have been improvements in this plant and progress in a number of areas,'' he said.
But in the end, it was deemed that the cost structure at Mayfield was too high to continue tire production. Some equipment was moved recently following the other cutbacks, and more may follow. ``Needs will be evaluated and we'll go from there,'' he said. ``Normally equipment follows production needs, so there probably will be some more equipment moved.''
Following Conti's announcement, some state and local officials indicated they wanted to meet with Conti to try to get the company to reverse its decision.
When asked if he thought there was any hope the plant would continue to make tires, Mr. Beane said there was a ``small window of opportunity. We'll just have to go see.''