Editor’s note: Story updated with changes throughout.
Rheem announced Thursday (June 23) the company will move 250 jobs from Fort Smith to an expanded manufacturing plant in Nuevo Laredo, Mexico, during a phased plan expected to last three years.
Rheem’s Fort Smith plant now employs about 1,100 hourly and 300 salaried workers. The company’s Fort Smith employees were notified of the decision Thursday morning.
“We anticipate most of the employees in these jobs will be able to be placed in other jobs at the Fort Smith plant as a result of normal attrition and retirements,” the company noted in the statement. “The Fort Smith plant continues to be a key manufacturing facility in the company’s global business plan and additional capital investments in Fort Smith are planned during this transition period.”
The 290,400-square-foot plant expansion in Mexico is expected to be finished by spring 2012. The plant now produces air conditioners and heat pumps, and will begin to produce residential heating and cooling equipment now produced in Fort Smith.
Rheem said the move is part of its “global competitiveness strategy,” with the Nuevo Laredo plant able to produce “at a highly competitive cost.”
“We operate in a highly competitive, global business environment,” the company noted in a response to The City Wire. “We have a responsibility to remain competitive and grow our business for our owners and for the security and well-being of our approximately 7,000 global employees.”
Rheem is based in Atlanta, with manufacturing plants in Fort Smith, Montgomery, Ala.; Oxnard, Calif.; and Eagan, Minn.; and a parts distribution center in Randleman, N.C. In 1987, Rheem became a wholly owned subsidiary of Paloma Industries of Nagoya, Japan, the world’s largest producer of gas appliances.
The company manufactures residential and commercial heating and cooling systems; tank, tankless, solar and hybrid heat pump water heaters; whole-home standby generators, controls, swimming pool and spa heaters; indoor air-purification products; and commercial boilers throughout North America and world markets. The company’s premium brands, including Raypak, Ruud and Rheem.
The Rheem news is part of an ongoing saga in the significant employment decline of the region’s manufacturing sector.
Fort Smith’s manufacturing sector employed an estimated 21,100 in April, up from 21,000 in March, and down from the 21,600 employed in the sector in April 2010. April marked the first manufacturing employment gain since July 2010. Employment in the sector is down 31.2% from more than a decade ago when January 2001 manufacturing employment in the metro area stood at 30,700.
The news also ends what had been a string of good economic news for the Fort Smith area.
Golden Living announced March 30 it would bring about 200 jobs to its Fort Smith administrative center during the next two years. The jobs are expected to boost employment at the center to 875.
Tampa, Fla.-based Sykes announced in January it would add 600 jobs to the Fort Smith regional economy with an inbound call service center it plans to locate at the former Phoenix Village Mall. Sykes global business process outsourcing company that employs more than 50,000, begin hiring in March.
It is also expected that Mitsubishi, now constructing a $100 million wind turbine assembly plant at Chaffee Crossing, will employ as many as 400 in the area by the first quarter of 2012.
The Mitsubishi jobs will be needed to help keep the region’s jobless rate below 8%. The Fort Smith metro jobless rate fell to an estimated 7.7% in April, with the estimated number of unemployed falling below 11,000 for the first time in five months. The April jobless figure is below the 8.2% and 7.9% annualized rates during 2010 and 2009, respectively.
Paul Harvel, president of the Fort Smith Regional Chamber of Commerce, said the chamber is working with the Arkansas Economic Development Commission to help support the possible “significant expansions” of five companies in the Fort Smith area.
“Obviously these decisions are ultimately out of our control, but I think we will have a very good chance with all five of them,” Harvel said.