Avon Automotive confirms closure of Michigan factory

Cadillac, Michigan - Avon Automotive Inc. plans to close its Manton, Michigan, moulded-rubber parts plant by midsummer and shift the site's automotive production to Mexico.

About 150 workers are employed at the 85 000-foot² (7900 m²) factory. The actual number of layoffs hasn't been determined because some jobs will be transferred to the company's hose plant here, CEO Lee Richards said in a phone interview this month.

Richards cited increased energy and material costs along with a poor automotive parts market as the prime reasons for the closing. In particular, a downturn in volume from Ford Motor Co. and the Chrysler group, which the Manton plant supplies, has hurt the factory.

"And our view of 2007 is sales will continue to be down at Ford and Chrysler and put us in a position where the business is not viable anymore," Richards said.

3 phases of layoffs

Avon Automotive will phase down production at the factory over the next several months. About 15 percent of the plant's production is nonautomotive, Richards said, and that will be shifted to Cadillac. The rest will go to one of two plants in Mexico.

Richards estimates that 30 to 50 jobs could move to Cadillac and that 100 to 125 employees will lose their jobs. He made the announcement early to give workers an opportunity to find other work.

Avon, of Cadillac, has put together a severance package and is working with the state of Michigan and other agencies on retraining programs. Richards also has contacted the Cadillac Area Industrial Group, made up of industrial employers in the city, to find possible job opportunities.

The layoffs will be made in three phases: March, May and July, Richards said.

"We've been in Manton since the mid-1970s, and we're a major employer there because it's a small city. So this is difficult for everyone," he said. "We'll close the plant, and we'll do a national search to sell it."

Avon Automotive's 10 other factories in nine countries are in somewhat better shape than Manton, although some have seen sales decline because of the sagging Detroit 3, Richards said.

The company, which has a work force of about 4000, is diversifying its Cadillac operation, the only one it will have left in the United States when the Manton site closes. Avon Automotive also is placing more emphasis on its nonautomotive business.

Richards said the company has been trimming staff, mostly temporary workers, at the Cadillac plant for the past six months and will continue to do so for the next six.

Adjusting capacity

"We are continuing to rationalise capacity in Europe and shifted some of the lower-tech business. But our plants in France, Germany and Spain continue to be a challenge," Richards said. "Those operations are focused on higher-tech products."

Last August, a management team headed by Richards acquired the automotive rubber parts maker from parent Avon Rubber PLC in Wiltshire, England.

The company has made significant investments at Cadillac and three other sites: a vibration management systems plant in the United Kingdom; a recently constructed hose factory in Turkey, which started production in May; and a hose plant in Mexico. Richards didn't give a figure on the investments but said the latter three were capacity expansions.

Avon Automotive is diversifying its customers to better reflect market share; looking to expand its business in Asia, principally focusing on China; and extending its growing nonautomotive operation, particularly in the small engine and off-road markets in the United States.

From Rubber & Plastics News (A Crain publication)