September 16, 2009 11:23 PM
By Sean Gaffney
McALLEN — Two U.S. companies announced plans this week to shift production to factories in Reynosa, bolstering unemployment in a maquiladora industry assailed by a global downturn in manufacturing.
On Monday, Kohler Co. said it will shutter a U.S. plant and fold production of stainless steel sinks into its Reynosa facility. On Wednesday, Steelcase, an office furniture manufacturer, said it will open a new facility to build chairs in early 2010.
Grand Rapids, Mich.-based Steelcase said it was unsure how many jobs the new facility would create.
Kohler said the expansion of its factory in Reynosa will not create new jobs. The company will rehire workers that had been laid off. Kohler declined to say how many jobs have been cut this recession.
With the downturn in housing, demand for sinks manufactured at Kohler’s Searcy, Ark., facility had fallen and the company had to fuse production with the factory in Reynosa, Todd Weber, a vice president for the Kohler, Wis.-based manufacturer said.
“Both of our plants are underutilized,” he added. Kohler expects to close the Searcy facility by the end of the year.
Steelcase expects to launch production at its new factory in early 2010, said Jeanine Holquist, a company official. None of the company’s other factories will be closed and no workers will be laid off, she added.
“We were looking for a place to consolidate our chair production,” Holquist said. “It gave us a great location to serve customers across North America and it helps us to control shipping cost as well.”
Kohler and Steelcase are the latest major manufacturers this summer to announce expansion in Reynosa. LG Electronics said in July that it was folding production at a plant just across the border from California into its Reynosa maquiladora. The South Korean manufacturer said it expects to create 1,200 jobs with the shift which is expected to finish this month.
A global downturn in manufacturing has slammed Reynosa’s maquiladoras this year, contributing to a 5.3 percent decline in employment. Analysts have said the job loss is slowing and that manufacturing in Reynosa should begin recovering by 2010.
Often, new employment in Reynosa comes at the cost of domestic manufacturing jobs. At the Searcy, Ark. plant, which famously weathered a strike that lasted from December 2006 to November 2007, the majority of Kohler’s 57 employees will lose their jobs the day before Thanksgiving.
Buck Layne, president of the Searcy Regional Chamber of Commerce, said that while the city was disappointed to lose the factory, the area has actually added jobs in recent months that could help mitigate the loss. The factory, which opened in 1966, once employed more than 400 people, Layne said.
The Reynosa plant, the other facility which manufactures sinks, opened in 2002 when the “housing market was thriving (and) demand for stainless steel sinks was equally robust,” the company said in a press release.
The recent economic revitalization in Searcy, a city with a population of about 20,000, has been led by natural gas companies, which have added about 2,000 jobs in the last 18 months, Layne said.
“It’s a global economy these days, but we need to make sure that we’re playing on an even field,” Layne said. “It’s just very discouraging to see jobs leaving the U.S.”
Sean Gaffney covers business, the economy and general assignments for The Monitor. He can be reached at (956) 683-443
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