Aluminum wheel-maker Superior Industries International is drastically reducing its Fayetteville manufacturing operation, leaving about 250 workers without jobs in the coming months.
According to a letter distributed to employees Wednesday, the reduction in operations will mean manufacturing jobs at the plant will end between Nov. 16 and June 1. The cuts don't include about 35 workers, primarily engineers, who will remain to support the company's technical center and parts distribution. The clear-coating operation will also remain in the near term.
The company said in the letter that the move allows it to consolidate its manufacturing operations in North America to stay competitive in the marketplace. Superior Industries declined to comment.
"Much of our team in Fayetteville had been part of the Superior family for many years, and we appreciate your dedication and hard work," the letter read in part. "We are committed to supporting you through this transition, and we will make it a top priority to continue working safely during this time."
Southfield, Mich.-based Superior Industries is one of the world's largest providers of aluminum wheels to the automotive industry, with Ford and General Motors its largest customers, according to the company's 2018 annual report. It employs 8,000 workers worldwide and produced 20.9 million wheels in 2018, up from 17 million the year before. Revenue stood at $1.5 billion with net income of $26 million for 2018.
Earlier this month, Superior Industries' board of directors suspended its quarterly common dividend, worth about $11 million, to reinvest in the business and pay down debt. In May 2017, Superior Industries purchased Germany-based Uniwheels through a tender offer valued at $715 million. Uniwheels is the third-largest aluminum wheel-maker for the automobile market in Europe, and it also makes aftermarket wheels.
Shares of Superior Industries rose 25 cents, or 7%, to close Wednesday at $3.75 in trading on the New York Stock Exchange. Shares have traded as low as $2.26 and as high as $18.84 over the past year.
The Superior Industries plant in Fayetteville opened in 1986. Fayetteville is the company's last operation in the U.S. It has four plants in Mexico as well as operations in Europe.
In its 2018 annual report, Superior Industries noted that 84% of its wheels sold in North America were from its Mexico plants. The report said the overall costs to manufacture in Mexico are lower, citing lower labor costs and lower prevailing-wage rates.
In July 2014, Superior Industries said it would close its Rogers plant and move work to the Fayetteville plant and its Mexico operations. The Rogers plant employed 500 people.
The letter to employees indicated Superior Industries is working with the Arkansas Business Retention and Workforce Transition Team to examine possible job training or other support services for those losing their jobs. The letter noted severance packages would be available to eligible workers.
"Superior Industries has been a significant investor in the state in years past and satisfied all incentives requirements several years ago," state Commerce Secretary Mike Preston said in a statement Wednesday. "We're glad to see they're keeping some operations in Fayetteville but of course disappointed so many people will be laid off in the coming months. In the meantime, the Department of Commerce and Dislocated Workers Taskforce will work to ensure the employees who are let go will have other job opportunities."
According to information provided by the Arkansas Economic Development Commission, Superior Industries since 1992 has received various state incentives as well as $2 million in payroll rebates.
Steve Clark, the president and chief executive officer of the Fayetteville Chamber of Commerce, said the news came as a surprise to him, but he noted the company had faced head winds. He noted that Superior Industries had been an employer in the city for many decades and that it has provided the city with good-paying jobs for highly skilled workers.
He said that with the region's unemployment rate so low, and with the skills possessed by the Superior Industries workers being in demand, he hoped the unemployed workers would quickly find work. He said his organization would help.
"We're going to try to make sure they don't miss a paycheck," he said.
The preliminary unemployment rate in July for the Northwest Arkansas metropolitan statistical area -- which consists of Benton, Washington and Madison counties, along with McDonald County in Missouri -- stood at 2.8%, down from 3.1% for the same month a year before. The unemployment rate for Arkansas was 3.4% in July, a record low for the month. The unemployment rate for the U.S. was 3.7% in July.
Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas, Fayetteville, said that in addition to the lower cost for labor in Mexico, Superior Industries is likely moving operations to insulate itself from shifts in import tariffs on aluminum, a key component of its products, by focusing production in Mexico and Europe.
While he said the unemployment rate is low in Northwest Arkansas, it's unclear if Superior Industries employees who lose their jobs will find comparable jobs locally. He noted that Northwest Arkansas' manufacturing skews heavily toward nondurable goods, a sector that typically pays less than durable goods.
"The question is, can they find a job with the same salary and with the same benefits?" Jebaraj asked.
Business on 09/19/2019