GRAND RAPIDS — Dematic, a manufacturer of conveyors systems, will explore the closure of its Grand Rapids manufacturing operations, according to a statement released today.
The company expects the closure to impact 300 workers at its Grand Rapids facility, located at 507 Plymouth Ave. NE, as it transitions production to its facility in Monterrey, Mexico over a six-month to nine-month period.
Dematic manufacturers conveyor and sortation equipment from its Grand Rapids location.
Company executives say the pending decision to close the plant is part of on-going company evaluations and is solely based on productivity cost issues.
“This is not a union issue,” Rob Arguelles, executive vice president at Dematic, told MiBiz. “It’s based on cost productivity issues as we need to secure the jobs of 5,000 worker across our entire operation.”
Workers at the plant are represented by UAW Local 1485 in Grand Rapids.
A representative from the local organization was not available for immediate comment.
Arguelles did note that the tight labor market in West Michigan has caused concern at the company.
“We have noticed the same (labor shortage) dynamic elsewhere in the world,” Arguelles said.
Dematic does plan to continue the operations at its North American headquarters, located at the same site as its Grand Rapids manufacturing plant, Arguelles said. The company employs 900 engineers, customer service reps and other operational employees at that location.
When asked what would help the company make up for its productivity cost issues, Arguelles said state incentives, tax abatements and union concessions all would play a valid role as the process moves forward.
“We’re working with our partners and the UAW as we move through this process,” Arguelles said.
Arguelles did not offer a time frame to consider the decision.
Despite the potential closure, Tim Mroz, vice president of marketing and communications at The Right Place Inc., does not see the announcement as evidence of West Michigan becoming less competitive.
“When we’re seeing manufacturers left and right continue to invest, hire and expand, I don’t think this is indicative of a competitive disadvantage for West Michigan,” Mroz said.