Industry News

[November 03, 2006]

380 to lose jobs in Elma plant closing: Continental to shift work to Asia in 2009

(Buffalo News, The (NY) (KRT) Via Thomson Dialog NewsEdge) Nov. 3--Continental AG will close its 380-job manufacturing plant in Elma and ship the work overseas, citing pressure to reduce costs to keep pace with competitors.

The shutdown will be completed by the end of 2009, the company said Thursday. Continental, a German company most known for its tires, acquired the plant from Motorola Inc. earlier this year in a broader $1 billion deal for Motorola's automotive electronics business.

Continental will scale back manufacturing at the plant as products reach the end of their life cycle, said Jim Gill, a company spokesman. The first of the job cuts will take effect in mid-2007, he said.

The Elma plant makes auto electronics, such as sensors and relays, for vehicle makers and component manufacturers. Starting in 2008, the remainder of the plant's sensor operations and service will be shifted to Continental plants in Asia, the company said.

Gill said two principal influences were behind the Elma plant's phaseout: the need to reduce costs in a global market and a "softening" of the automotive industry, which the Elma plant serves.

The employees will receive severance packages based on their number of years of service, along with career adjustment help, Gill said.

The shutdown will also affect an additional 50 to 60 contract employees at the plant who are provided through a staffing agency, he said.

Continental employees interviewed said they were surprised by the news, especially since Continental completed its deal to buy the Motorola unit only in July.

Patrick Betz, who has worked at the plant for 11 years, lamented the loss of more American manufacturing work to cheaper labor in overseas factories. "It's a very somber experience today," he said as he drove home from his shift amid a stream of American-brand cars and trucks.

Betz said once his job is eliminated, he planned to go back to school and get a degree. "At least they're giving us some time," said Betz, noting that the cuts won't begin until next year.

Michael Nolan, Elma's town supervisor, called Continental's decision "a blow. It's an effect of the automotive industry."

"There was no indication whatsoever that a reorganization was going to occur there," he added.

Charles Webb, executive director of the Erie County Industrial Development Agency, said local economic development officials would take a two-track approach to responding to Continental's announcement.

The officials will see if they can provide an incentive package or program that could reduce the Elma plant's costs enough to persuade the company to keep the plant open, rather than moving the work overseas, he said.

If Continental moves ahead with its decision to close the plant, he said, officials will try to recruit another business for the site before the shutdown is complete, he said.

Gill said the decision was driven by factors beyond the Elma plant.

"We have a very, very good work force here," he said. "But as part of a global industry that we are competing in, it's a challenge. It's nothing that the employees did or did not do."

The Continental plant's situation is reminiscent of some other area manufacturers, including Delphi Corp., that have struggled to compete with low-cost foreign rivals.

When the deal between Continental and Motorola was announced in April, Continental executive board Chairman Manfred Wennemer said he expected few job cuts to result. Continental paid $8.4 million for Motorola's plant on Jamison Road. Gill said it would be put up for sale.


Copyright (c) 2006, The Buffalo News, N.Y.
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