A changing market and significant operating losses of more than $300,000 a month have led to the announcement of a major reduction of approximately 200 employees at the local Raybestos Products Co. facility in Crawfordsville.
In an internal memo obtained by The Paper of Montgomery County, competition from within the United States, as well as globally, has greatly changed the business climate during the past several years. As a result the company has reviewed its strengths and has decided to emphasize what the company is strong at producing – specially engineered friction material with related bonding activities.
Raybestos officials did not return a phone call seeking comment this morning.
According to the memo the company has been sustaining operating losses of approximately $300,000 per month. The memo also cites an additional loss of $300,000 a month related to corporate overhead.
The memo said that the operating losses are due in part to the following issues.
1. Significant steel and other raw material price increases
2. The loss of large blocks of business over the last several years, including Allison and Caterpillar heavy-duty business.
3. Continuous reductions of product sales prices demanded by customers.
4. Upward production costs caused by increased wages and health care costs for employees without corresponding productivity increases.
As a result the company will immediately leave the steel business, the memo said. This is an area where the RPC is running into stiff competition from other companies and an area the company is losing "significant money." As a result of leaving the steel business the company must move the heavy-duty paper assembly plant to an outside steel supplier.
The result will mean the loss of approximately one-third of the Crawfordsville work force. The current workforce is close to 600 employees.
In addition to the moving of the heavy-duty assembly operation out of Crawfordsville, a preliminary decision to move the automotive assembly business is recommended since it would lead to transportation and logistical savings.
Other ways the company is looking to save costs include pay reductions, overtime reductions using 7-day continuous shifts, fewer job classifications, an extremely flexible workforce and providing market-rate health care and other benefits.
Company officials will not make a final decision until Dec. 1 on this move.
The company is currently planning on keeping its paper making, paper blanking, saturation, sintered metal, NATS and 5X business in Crawfordsville. However, cuts in cost could come in these areas as well should labor-related savings not be achieved, the memo said.
And according to the memo, RPC is willing to begin immediately begin open discussions with union representatives aimed at keeping as many jobs in Crawfordsville as possible. Should these talks not be productive, the memo stated that other jobs could be in jeopardy.
Copyright © 2005 The Paper of Montgomery County