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Saturday, Feb. 21, 2009

Rheem to shut down Milledgeville facility

Four days after more than 650 employees returned to work, Rheem Manufacturing Corp. announced Friday it will close its Milledgeville plant for good.

The plant will shut down by the end of this year, and workers will be laid off in stages as the company consolidates operations at existing plants in Arkansas and Mexico, Rheem officials said. The first wave will come in late May when 500 employees, almost half the Milledgeville location’s work force, are let go.

“Unfortunately, the precipitous drop in new construction and the global economic crisis show no signs of short-term recovery, a situation which has forced us to take this difficult course of action,” Chris Peel, Rheem’s chief operating officer, said in a statement.

Many of Rheem’s workers had just returned to work Monday. The company had laid off 247 employees in August and another 420 in late October. At the time, Rheem officials called the layoffs temporary.

Seasonal layoffs at the plant have been common during its 30 years in Milledgeville, but workers suspected things were different this time. After the first mass layoff, a crew removed an entire assembly line from the factory, feeding a prevalent fear that jobs were headed to Mexico. Workers who were not laid off worked sporadic schedules through the rest of the year.

Jonas Young, a 26-year employee and longtime local union president, said the writing was clearly on the wall.

“They’re still moving (equipment) out as we speak,” Young said Friday afternoon. “They were bringing people back, but where were they going to put them to work? They had people sweeping the floor, walking around.

“The union’s perspective was this was a plant closing from the beginning,” he said. “Rheem was masquerading.”

William Ostan, Rheem’s vice president of human resources, said Friday at a news conference in Macon that the company had hoped business would pick up by this time of year, as has been the case in the past. Workers were recalled despite low orders so they could get additional pay and group insurance and other benefits, he said.

“We had always planned on bringing the employees back in February. No one would have predicted the economy would have declined like this,” Ostan said.

The recall also allowed the company to break the news “face to face” with employees, he said. Workers were told about the closing at a 1:30 p.m. meeting.

“We very easily could have sent them notice without calling them back,” Ostan said. “We felt that was the proper thing to do. We very easily could have just sent out a letter.”

Young said armed police were brought to the plant Friday but that employees left after the meeting in a peaceful and orderly fashion.

“They had expected this. They were upset, but they were kind of relieved,” he said.

After the May layoff, another 300 workers will be laid off in July, followed by another 250 to 300 when production ends in September, Ostan said. A small number of workers will remain to shut down the plant.

The closing will be a big blow to Baldwin County, where unemployment climbed to 11.5 percent in December. That was before Shaw Industries announced in January plans to close its carpet fiber plant in Milledgeville, leaving another 150 people looking for work.

Rheem’s closing will have some big-time ripple effects. The plant employs 1,080 hourly workers and 80 salaried employees, and many of them live in surrounding Jones, Wilkinson, Putnam, Hancock and Washington counties.

The plant is the area’s largest private employer and, according to Young, has an annual payroll of about $24 million. Company officials said Friday they could not confirm the payroll.

“This is going to be devastating,” Young said. “Rheem pumps in a lot of money to those counties.”

Company officials said Friday that the heating and cooling industry is down about 40 percent since 2005. Business at Rheem is down about 40 percent to 50 percent, Chuck Holt, the company’s vice president of strategic manufacturing, said Friday in Macon.

The existing facilities in Fort Smith, Ark., and Nuevo Laredo, Mexico, “are best suited to meet the company’s current production and business demands,” the company said in the statement to the media. Demand is higher at the Arkansas plant, Holt said, and the Mexico plant produces a “value line” that is exported around the world.

“That business,” he said, “is not quite as bad as the domestic business.”

Rheem officials said the company is working with the Georgia Department of Labor to put in place resources for hourly employees, including résumé-writing workshops, health benefit fairs and job skills training. Hourly employees also are entitled to Federal Trade Act assistance.

The company also is offering all salaried and hourly employees severance pay, continued group insurance coverage benefits and transitional assistance, officials said.

Details are being negotiated with the union, said Ostan.

“We’ll be as supportive as possible to our employees,” he said. “These are difficult times, as we all know.”

Rheem owns the Milledgeville facility. Officials said Friday they are not sure what the company will do with the property, but there are no plans now to return there.

“We’ll keep our options open for Milledgeville,” Holt said. ”We may look for other uses of that facility that could create jobs.”

To contact writer Rodney Manley, call 744-4623.