By Annie Goeller, Daily Journal of Johnson County staff writer
Major slowdowns in auto sales forced one of the county's biggest employers to make significant cuts in staff during the past year.
KYB Manufacturing has eliminated up to 45 percent of its staff since March 2008 and reduced staffing in the Franklin plant from two shifts to one earlier this month, general manager John Papandreou said.
The cutbacks are due to drops in sales of the vehicles the company makes parts for, which mainly includes shocks and struts for Japanese automakers, including Honda, Toyota and Subaru.
As sales have dropped and automakers have reported losses of 30 percent to 40 percent, they are demanding fewer parts for the new vehicles they produce, Papandreou said.
The plant has not lost any contracts or stopped producing parts for any specific vehicles, but the orders have been reduced, he said.
And that means less work for the Franklin plant.
KYB Manufacturing isn't alone.
Other companies in the automotive field and other sectors are reporting layoffs, shift reductions and worse, said Cheryl Morphew, executive director of the Johnson County Development Corp.
Trussway Ltd. has announced it will close its Franklin plant this year.
Officials from NSK Precision America, Mitsubishi Heavy Industry Climate Controls, Casting Technology Co., Hisada and Pridgeon & Clay were not available for comment.
"Everybody's struggling. Everybody is making these tough decisions, not just the auto industry," Morphew said.
But the automotive industry, one of the largest industries in the county, has been especially hard hit.
Auto sales have dropped because of multiple factors, including people losing their jobs and banks tightening lending standards, meaning buyers are facing more difficulty if they want a loan to get a car, Papandreou said.
Late last year, automakers saw the downward shift wasn't stopping and put out orders to reduce their inventory, meaning less parts would be needed, he said.
Facing a drop in orders, KYB started reducing staffing hours, with some employees working less than full-time as of December.
January and February showed sales had dropped more.
In February, the plant went to four days a week for two shifts, meaning employees, including office staff, were working less than full time. The plant stopped allowing overtime.
When the February numbers came in, officials decided to reduce staff to one shift per day, cutting the night shift, Papandreou said.
The layoffs are a first for KYB, which has been in Franklin for 21 years and employed 660 people in October 2006, he said.
Papandreou would not provide the plant's most recent number of employees.
"(KYB) has been immune to this kind of pressure, so I think because of that some of the impact is surprising," he said.
And he wants people to know the company remains financially strong, saying that a thought of closing is "eons" away and would have to come with a very poor performance level.
KYB has experienced continuous growth for years. Last year, the plant completed an expansion to double its size and add 51 jobs.
With that expansion, the plant could have made more parts, added more equipment and renovated its office space.
But those plans have been put on hold, and some portions of the plant sit empty until auto sales rebound, Papandreou said.
And he hopes that will come soon.
KYB soon could be producing parts for a new model that one automaker is planning to replace a current model later this year. That could potentially require more workers, Papandreou said.
And, while auto sales have been falling, the numbers are starting to level off.
That means plant officials can know what to expect and plan staffing around those figures, he said.
"It's dropped, but it's not getting worse. It has been steady," he said.
People still are buying cars, and his hope is that sales will begin to increase as people get jobs and regain confidence in the economy.
"Those folks will come back when they feel more confident the economy will continue to grow," he said.
When that will happen is anyone's guess, Papandreou said.
His hope is to start calling some of the laid-off workers back in the next few months.
Papandreou said he often thinks of the employees who have been laid off and wonders what they are doing to make ends meet during this tough time.
One factor in the decision to move to one shift was the stress on workers, who could not receive unemployment benefits and also were receiving less pay with reduced hours, he said.
His hope is that the community understands why the layoffs and cutbacks have been necessary.
"As hard as the actions we take are, we're taking these actions to make sure we survive in a strong way so when the economic recovery starts to happen, we can take advantage of that," Papandreou said.