By Jeff Tucker, Shelbyville News staff writer
Lagging auto sales continue to decimate the local automotive-driven economy.
The Shelbyville News received unconfirmed reports Friday that O'Neal Steel of Shelbyville reduced its work force by 30 employees this week - 19 labor and 11 management - from its plant at 841 N. Michigan Road. Company officials declined to comment.
The Shelbyville News also learned Friday that Shelbyville-based PK USA has laid off about 80 hourly and salaried employees in the past two weeks.
Pilkington North America Inc. officials informed employees this week that 51 union employees will be laid off indefinitely by the end of the month, reducing the work force at the automotive glass-manufacturing plant by almost half of what it had been in November.
PK employees were told of the layoffs in January, said Bill Kent, PK USA vice president of corporate relations. The individual layoffs were based on company need, he said.
"Everyone was informed these were permanent layoffs," he said. "I told the folks we will do what we need to do to survive, and we survive."
PK USA's 317,978-square-foot plant supplies metal body parts, chassis parts and plastic injection parts to automotive companies in the United States and other parts of the world. Kent said the layoffs were due to drops in sales.
The plant, on a 66-acre site at 600 W. Northridge Drive in Shelbyville, also laid off about 30 employees in December. The plant is nonunion, and there are no severance packages for laid-off workers.
"This is not our first reduction, and basically, we told our employees we expect this to continue at least through the end of April," Kent said. "That's basically as far as we could project."
The latest round of layoffs leaves fewer than 300 salaried and hourly employees at the PK plant that manufactures parts for Nissan, Subaru, Toyota and Honda.
"Sales volume is going to dictate staffing levels. We couldn't keep the current staffing levels," Kent said. "This is survival mode for this business because regrettably, new automobiles are not a necessity, they're a luxury.
"On the positive side, there's new business on the horizon. Of course the question becomes how big will the volume be in this depressed market and, of course, no one knows."
Kent said PK USA had 519 full-time employees in February 2007, 366 in November and was down to 319 in January.
"These are all good people. We have cut into the meat of the organization," he said. "It's honestly just a sad time. It breaks my heart what's going on. For our employees to have to pay this price for circumstances they did not cause is just not right. I have whole families working out here. It's just a sad state of affairs for everybody."
The Shelbyville Common Council voted unanimously in early January to grant PK USA two tax abatements over 10 years on improvements of more than $14.3 million being made at the plant.
That money will be used to rehabilitate an existing building and purchase new equipment for two auto parts manufacturing projects involving Toyota and Honda as well as to pay for the transfer of equipment from the company's Tennessee operations to Shelbyville.
According to company officials, PK USA plans to invest about $2.8 million to modify, redevelop and rehabilitate an existing building. An additional $7.5 million will be spent for new manufacturing equipment, including 1,300-ton and 300-ton blanking presses.
Another $4 million will be spent to transfer manufacturing equipment from Tennessee to the Shelbyville plant.
Kent said he was not sure if the latest rounds of layoffs would affect the tax abatements.
Over the last 17 years, the city of Shelbyville has passed resolutions and ordinances granting PK USA numerous tax abatements for new equipment, rehabilitation and redevelopment.
According to city documents, PK USA paid more than $14.3 million in wages to Shelbyville employees in 2008.