Superior Industries International, Inc., announced Monday that it will close its manufacturing facility in Pittsburg effective Dec. 19, shutting down one of Pittsburg’s biggest employers.
The facility employs more than 600 people — the second most in the city behind just Pittsburg State University. Superior’s payroll of $27 million is the third-highest in the city behind PSU and Mt. Carmel. The 600 employees represent about 4.6 percent of Pittsburg’s overall workforce.
One of those employees, Brian Watson of Arma, walked out and quit shortly after hearing about the layoffs.
“They just pulled us outside and told us we would be laid off sometime in the next six months,” said Watson, a machinist. “We don’t know when. We were just told we would get a letter in the mail when we were fired.
“I’ve been here almost six years, and they say that we’re going to get a week’s pay for every year that we’ve worked here — 40 hours,” Watson said. “I came here because I could work 12 hours seven days a week. I can’t live on any 40-hour check.”
Watson, who said he had a wife and three children, 9, 7 and 4, said several other employees quit over the course of the day.
“To call it a dark day in southeast Kansas would be a major understatement,” said Blake Benson, Pittsburg Area Chamber of Commerce president. “Any time you lose your third-largest employer, it’s a bad situation. Our focus needs to be with the employees of Superior, and we’re going to try to keep as many of them here as possible before they start looking.”
In a release, the company announced that it has completed its review of strategic initiatives to reduce costs and balance its manufacturing capacity in the face of reduced demand for SUVs and light trucks. Based on this review, the company said that it will undertake two significant actions.
In the first of these actions, the company will close its Pittsburg facility. The company expects to incur severance and related costs as a result of this plant closure of approximately $1.8 million over the next six months. Asset impairment charges related to closing the facility have yet to be determined, but will be recorded in the current quarter ending September 30.
As of July 27, the net book value of manufacturing equipment at the Pittsburg location was approximately $13.2 million.
But the economic impact on Pittsburg will likely be more than $110 million. Benson said economic impact analysis dictates to use a multiple of four to seven to figure out the impact. That number doesn’t include effects on real estate or sales tax.
“Obviously we are disappointed,” said Mark Turnbull, Pittsburg economic development director. “It is not unexpected with the condition of the United States automobile industry, and the part in that process that Superior plays. It’s a blow to our economy, and frankly, it’s a blow to our city.”
And a blow to Crawford County. About 384 employees call Crawford County their home, with 457 residing in Kansas.
“Obviously, it’s quite a shock to all of us,” said Bob Kmiec, chairman of the county board of commissioners. “Not only is it going to affect the people working there, but the whole county.
“Hopefully it’s a temporary setback and they’ll get back to work soon. This doesn’t just affect Pittsburg, but the entire county. There'’s going to be a wide area it’s going to take an effect on.”
Kansas Gov. Kathleen Sebelius responded to the closure Tuesday afternoon, saying that she was “very disappointed to hear about this plant closing and is concerned about the impact on the employees and their families as well as the community.”
Interim City Manager John Van Gorden said it was the largest local shutdown since McNally’s closure. McNally sold its Pittsburg building in 1989 and slowly phased out production until totally closing the facility in early 2002.
“The biggest thing, with a closing like this, or like McNally’s is the psychology,” Turnbull said. “People said, ‘McNally’s is Pittsburg.’ It’s not always easy to get past that.”
Turnbull said he hadn’t talked with Superior representatives, and didn’t know what the future of the 15-acre facility was. Pittsburg City Commissioner Rudy Draper, a former Superior employee, said he wasn’t sure the city would be able to fill the building.
“Everything is just so specialized,” he said.
Draper said he was “depressed” about the closure, which affected people he worked with about a year and a half ago. Draper now works at Miller’s.
“Those are my friends, and the are my colleagues,” Draper said. “So it’s a little more personal for me. It’s just so many employees.”
And it’s an issue that will face the city commission in the near future. Van Gorden said the city would have to look at the freshly approved budget, and said staff “would have to monitor” the amount of sales tax coming in to help pay off bonds for the public safety buildings. Turnbull said the city was working on a plan with the Kansas Department of Commerce to try and salvage the situation.
Turnbull estimated the unemployment rate before the closure at five percent. Benson said anything under four percent was considered close to full employment. Turnbull said a higher stock of skilled workers could help to attract new business.
“They’re looking for skilled workers,” Turnbull said. “And Superior has about as skilled of workers as you’ll find.”
But Watson said he didn’t expect to find help with a tight job market and other local industries struggling.
“This town isn’t like it used to be,” Watson said. “It’s an <expletive> ghost town.”
The Pittsburg office won’t be the only one hit by Superior’s struggles. In addition, the company has canceled 90 open positions and will lay off an additional 65 employees. The cost of severance related to this additional layoff is estimated to be $296,000.
Together, these two actions will result in a reduction of 755 positions, or 29 percent of Superior’s U.S. work force.
“Superior’s goal is to prosper not just survive as we work through one of the most challenging periods in the history of our industry. The essential actions announced today will enable us to maintain our strong leadership position now and well into the future, and to maintain our financial flexibility by protecting our cash-rich, debt-free balance sheet,” said Chairman, CEO, and President Steven Borick.
“We are acutely sensitive to the impact of these difficult but necessary actions on our employees, and we are taking a variety of steps to help ease the transition,” Borick added.
Superior supplies aluminum wheels to Ford, General Motors, Chrysler, Audi, BMW, Fiat, Jaguar, Land Rover, Mazda, Mercedes Benz, Mitsubishi, Nissan, Seat, Skoda, Subaru, Suzuki, Toyota, Volkswagen and Volvo.
Superior hadn’t been heading down for too long — less than five years ago, the business took advantage of a tax abatement to expand its plant, Turnbull said. That abatement is still in effect.
“At this point, we’re really just dazed,” Van Gorden said. “We’re just like anybody else. It’s a lot to look at, and a lot we’re going to have to work through.”
Watson said he would discuss his future, and whether he would move, with his wife.
“I wear the pants in this family, but she tells me which leg to put in,” Watson said. “And this place can go to hell.”
Kevin Flaherty can be reached at kevin.flaherty@morningsun.net or by calling 231-2600 Ext. 134
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