Freudenberg-NOK to close Spencer plant

(Photo by Russ Mitchell) Freudenberg-NOK officials announced plans to relocate operations to Ohio and close its Spencer factory and warehouse in the Spencer Industrial Park. The company employed 65 workers. The plant closure is expected to be complete by April 2010.

Sarah O'Hare, the company's vice president of human resources and communications, said 65 jobs at the Spencer site will either be eliminated or relocated to existing Ohio facilities in Troy and Milan.

"This decision was not an easy one, particularly considering the impact it will have on some of our associates as well as on Spencer and its surrounding communities," O'Hare said, in a statement from the company. "But it is necessary in order to adjust to the current market realities, and to continue to serve our customers while safeguarding the overall company health."

Many employees will be asked to stay on as the company phases out work at the Spencer facility. The restructuring is expected to be complete by April 2010, though business conditions could shorten or lengthen the time line for the plant closure.

"We recognize this is a very difficult situation and we want to publicly thank our associates in Spencer, Iowa for all their hard work over the years," O'Hare said.

The Spencer plant opened in 1982 as VERCO Seal Co. and was acquired by Freudenberg-NOK in 2000. The Freudenberg-NOK headquarters are in Plymouth, Mich., and the company supplies parts to the automotive, appliance, medicine, science and heavy equipment industries.

It was founded in 1989 as a joint venture of Freudenberg & Co. in Germany and NOK Corp. in Japan.

In April 2005, the company closed its Spencer manufacturing property at 124 East 128th Street and moved operations to its Simrit warehouse at the current 3600 West Milwaukee Street location. The consolidation included a 18,000-square-foot expansion at the Spencer warehouse building.

The project earned Freudenberg-NOK one of 10 Iowa Venture Awards in 2006 from the Iowa Area Development Group. During the award banner presentation, Jed Skogerboe, manager of Business and Community Development with Iowa Lakes Electric Cooperative, explained that the banner and award signified "significant contributions to Iowa's economy."

In the hours after announcing the plant closure, O'Hare summarized a different national climate for the company.

"Over the last 18 months -- for us and our generation -- it's been unprecedented events," she said. "When the decline of the U.S. manufacturing market started happening and the automotive market started happening and you realize you have too many facilities to operate efficiently, you have to make assessments. There's a team put in place to do that analysis."

Craig Barnhart is the vice president of restructuring at Freudenberg-NOK. He said the performance of Spencer workers was never a factor in the decision to close the local plant.

"When we began the process of identifying costs and restructuring opportunities, we looked at each unique situation and looked at each product division," he said. "And when we looked at our fluid power division, we recognized that we had three production locations and we really only needed two production locations."

The company will transfer the production operations to its Troy, Ohio, facility and the warehouse distribution to its Milan facility.

"It's multiple factors that are evaluated at the end of the day. Certainly, geography is one of those factors," O'Hare said.

Barnhart added: "This is a very long process and something we do not take lightly at all. It's an extensive and a very exhaustive review where programs are looked at -- decisions are not snap decisions. They're looked at, they're shelved for a bit to age and to make sure everything settles. We come back and revisit it time and time again."

Melanie Stepp, the manager of organizational development at Freudenberg-NOK said Spencer employees were informed of the decision on Wednesday. The company is making outplacement services available to the employees, including coaching expertise to manage priorities during a transition to another job, developing resumes and developing job search strategies.

Each of the employees will be contacted about their placement needs.

The Iowa Lakes Corridor Development Corporation already had a job fair scheduled at 3 p.m. Tuesday, Oct. 20, in the commons area of the Gateway North Center. Corridor President and CEO Kathy Evert said job fair details will be made available to Freudenberg-NOK employees as well.

"We will do everything we can to help those families affected by this notice today," Evert said. "We're continually looking for other opportunities for new jobs in this area."

She said her organization, which promotes industrial development and population growth in a four-county region, had not heard from Freudenberg-NOK officials as of Wednesday afternoon.

"It's doubtful there will be any change in this decision," she said. "They've got other facilities and we're a long way from Michigan."

Evert said it's likely northwest Iowa hasn't seen the end of consolidation, but she anticipates an overall upturn in the manufacturing sector.

"We're hearing from some manufacturers that their business is beginning to improve," she said. "We're hearing that overseas markets are improving, but it is going to be slow and we may not have seen the last of any closings or layoffs -- I don't know. It's too unpredictable right now."