Springfield's manufacturing industry was dealt back-to-back blows last week when two out-of-state companies announced plans to close plants next year.
Illinois-based ATC Technology Corp. will close its drivetrain manufacturing facility in Springfield next year and relocate its production lines to Oklahoma City. ATC Technology operates locally as Aaron's Automotive Products Inc.
All 184 hourly and salaried positions at the Aaron's facility, 2707 N. FR 123, will be eliminated as part of the corporate restructuring announced Dec. 9.
The very next day, Dallas-based Trinity Industries Inc. (NYSE: TRN) publicized its plans to close the TrinityRail manufacturing facility at 1849 N. Park Ave. on Feb. 2. The northwest Springfield plant, which repairs, maintains and rebuilds railcars, employs 228 employees, all of whom will lose their jobs.
Meanwhile, other manufacturers operating in Springfield are hoping to avoid layoffs in the coming months.
At SRC Holdings Corp., Human Resources Director Malinda Stevens said the company has extended voluntary leave offers to about 800 employees working at its member companies. Stevens said employees who volunteer to take leave can negotiate the length of time they're gone, during which they receive a percentage of their base wage. In the spring, she said, SRC will reassess its work force to see if the voluntary leave program has a positive financial impact.
"Some of our businesses are doing very, very well," Stevens said. "Some aren't doing as great, but they're still holding up."
SRC companies work closely together and have been strategically shifting manpower based on demand, she added.
Orders slide
At Aaron's, all hourly personnel - about 80 percent of the staff - and some salaried employees have been offered positions in Oklahoma City, according to an ATC Technology news release. Employees who choose not to relocate will be offered severance packages, according to Chairman and CEO Don Johnson.
"Our plan is to cease operations on June 30," said company spokeswoman Mary Ryan.
"It will happen in stages. We don't expect to displace anybody before Feb. 15."
During the next nine months, ATC Technology will move the operations at Springfield's drivetrain plant, which remanufactures automatic automobile transmissions, to a company-owned facility in Oklahoma City, according to the release. Ryan said ATC Technology has operated the 200,000-square-foot Springfield facility since 1994 and employed as many as 1,500 in the early 2000s.
Publicly traded ATC Technology (Nasdaq: ATAC) said the restructuring is "in response to recent significant adverse changes in the business climate in the North American vehicle industry due to the economic slowdown," according to the release.
"The closure of our Springfield facility is another step in a series of cost-cutting moves that began in early 2008 and have continued throughout the year to streamline our North American drivetrain business," Johnson said in the release.
"While it is never easy to displace employees, it is critical that we tightly control our costs during these challenging economic conditions, which have significantly impacted our (original equipment manufacturer) customers' businesses that utilize our products for consumer repairs," he added.
Similarly, Trinity blamed the closing of its Springfield plant on a downturn in orders for freight railcars.
Restructure savings
Once the closure of the Aaron's facility is complete, ATC Technology will have reduced its North American drivetrain work force by about 40 percent since the beginning of 2008, according to the release.
The company expects the restructuring to generate a pre-tax annual savings of about $6 million.
ATC Technology shares opened at $15.79 on Dec. 11, compared to a 52-week range of $14.32 to $29.86.
The company's adjusted per-share earnings for 2008 range from $1.85 to $1.90, according to the release.
Trinity Industries shares opened at $14.75 on Dec. 11, compared to a 52-week range of $9.34 to $41.15.
Trinity's Rail Group reported third-quarter revenues of $752.7 million at an operating profit of $56.8 million, according to Securities and Exchange Commission filings.
In early November, The Oklahoman daily newspaper reported that Trinity was closing a similarly sized railcar manufacturing plant in Oklahoma City on Jan. 3.
