Superior Industries job losses painful even for NWA economy

The seemingly unstoppable Northwest Arkansas economy was punched in the gut Wednesday (July 30) as Superior Industries announced the closure of its wheel making plant in Rogers, eliminating 500 jobs as production is transitioned to sites in Fayetteville and Mexico.

Part of the reasoning behind the closure of the Rogers location is the age and lack of capacity in the older plant. Superior said it retooled the Rogers plant in 2013, but running at full capacity it was not able to keep pace with demand. The company doled out $18 million in the past year on the two facilities in Northwest Arkansas, and still lost marketshare because orders could not filled.

Most of the investment went to the larger plant in Fayetteville, a sign that those estimated 800 are not in imminent danger. It is not clear how many of the jobs in Rogers could be transferred to the Fayetteville site. About a year ago, Superior officials told The City Wire there were about 600 workers employed at the Rogers facility.

There were 26,300 manufacturing jobs in Northwest Arkansas as of June, this Superior closure is a 1.9% decrease in the overall sector, according to Kathy Deck, director for the Center for Economic Research at the University of Arkansas. While the news is not surprising, Deck said swallowing the losses is not easy, even for a growing economy like Northwest Arkansas.

Rogers Mayor Greg Hines issued this statement: “This is a very unfortunate and unexpected loss to the city and the region.  This underscores what I have been saying for the last several years, ‘It is just as competitive trying to keep the manufacturing jobs you have as it is to attract new ones.’ The end result of this is most likely another example of America losing manufacturing jobs to other countries instead of other towns.  The reasons for the move, I suspect, are more likely a result of the ability to reduce costs by outsourcings the work to Mexico. It is unfortunate American companies are forced to make these hard decisions in many cases just to survive. Company officials have been very complementary about the Rogers Plant and the overall business- friendly environment in Rogers. Our thoughts and prayers go out to the workers and their families.”

The Northwest Arkansas jobless rate in June was the lowest metro rate in Arkansas, but  declines continued in the size of the regional labor force and the number of employed. The June rate of 4.9% was unchanged compared to May but below the 6.1% in June 2013. Metro employment of 222,357 was slightly below the 222,568 in May, and also below the 223,267 in June 2013, according to figures released Wednesday by the U.S. Bureau of Labor Statistics. The June numbers are subject to revision.

‘NEWS IS NOT GOOD’
The loss of 500 jobs creates a big void to fill even if it is no more than part of the manufacturing ebb and flow as Deck adds that the local economy typically sees much smaller gains and losses.

“This Superior news is not good, but if there is a bright side in the timing of this announcement it’s that we are starting to see a push back into U.S. manufacturing. One of the issues in Northwest Arkansas has been a skilled manufacturing workforce. While we would rather have these folks employed, their presence here is a positive for company’s wanting to expand and locate in the region,” Deck said.

She said having two sister plants within the same region has been a bonus given so much of the auto parts and auto production has already been clustering south of the border.

Superior says jobs at the Fayetteville plant are not in jeopardy. Average local wages at Superior Industries range from $55,000 to $80,000 annually. At the lowest end of that range the economic impact is significant as there are not enough transferable job openings to absorb the 500 positions lost.

“Rogers has certainly seen better days,” said Raymond Burns, CEO of the Rogers- Lowell Chamber of Commerce. “We are working with the Arkansas Workforce Commission and plan to hold a job fair October 8 to try and help workers seek other opportunities.”

Burns said the loss to the city’s workforce is major and while the transition of jobs to Superior’s plant in Mexico will save the company money, much work must be done to ensure the local displaced workers can find other job opportunities.

RETENTION, NEW RECRUITMENT
The Northwest Arkansas Council and the local chambers of commerce have worked for two years meeting with local manufacturers and businesses to assess expansion and job retention plans. 

Grant Tennille, director of the Arkansas Economic Development Commission said the agency was aware of the company’s decision to relocate the jobs and the agency continues to work with the community and company to develop a plan to market that facility for other manufacturers. 

“Superior has been clear that this decision had nothing to do with Rogers or that workforce, it’s simply that the math no longer works. OEM (original equipment manufacturers) auto manufacturers have revamped their business models through the economic downturn. They are now requiring shorter turnaround times on their orders which used be made a full year out. Suppliers are still struggling to adjust to the new reality requirements coming from auto manufacturers,” Tennille said. “We are working with suppliers who are looking for large manufacturing facilities and a skilled workforce. The Superior plant in Rogers is the biggest facility to come open in some time and the skilled workforce is also an added plus in a market with 4 and something percent unemployment.”

WAL-MART HELP?
The AEDC priority is to get the Governor’s Dislocated Worker Task Force into Rogers for a full assessment of the skills level for every worker. Tennille said a skills profile will be completed on each worker so other manufacturers and employers with needs can be alerted. He said talks continue with Superior to try and place some workers at the Fayetteville plant, though the majority will need to find other jobs.

“I hate to see anyone lose a job, much less 500 in one city. But if someone put a gun to my head and made me close a plant in Arkansas, I dare to say I would chose one in Northwest Arkansas, given the region’s resiliency and the new opportunities we are seeing from Wal-Mart suppliers looking at the state for possible onshoring operations,” Tennille said.

Tennille also said the effort by Wal-Mart Stores to return manufacturing jobs to the U.S. could help absorb the Superior loss. Tennille recently told The City Wire that talks with potential manufacturers doing business with Wal-Mart showing interest in onshoring jobs specifically point to Northwest Arkansas. He has said there are two Northwest Arkansas announcements coming before the end of the summer that are directly linked to the Wal-Mart campaign.

Mike Harvey, chief operating officer of the Northwest Arkansas Council, said the loss of 500 jobs skilled labor jobs will no doubt negatively impact job numbers in the short term. He too, said there are several other manufacturers in the region investing and planning to add workers in the next year. 

“We hope to be able to match some of the displaced workers with the new opportunities before the end of the year. The big job fair in Rogers in early October is also timely,” Harvey said.

Superior Industries will hold its quarterly earnings call on Thursday (July 31) and hopefully provide more details about the closure and job transfer opportunities.