Loss of Unique Fabricating not a unique story in Fort Smith metro manufacturing sector

The same day one Michigan company announced it would open a plant in Fort Smith, another announced it would close a Fort Smith operation. The juxtaposition is emblematic of a regional manufacturing sector unable to gain employment momentum.

On Tuesday (Feb. 13), officials with Livonia, Mich.-based Applied Process disclosed they had acquired a 51,000-square-foot building in Fort Smith to expand their metal heat treatment business. The more than $2.5 million investment by the company is expected to create “at least” 30 jobs.

Also on Tuesday, Auburn Hills, Mich.-based Unique Fabricating announced closure of its small manufacturing operation in Fort Smith that employs 20 workers. Operations are set to cease in June. Work at the plant will be shifted to facilities in Evansville, Ind., and Monterrey, Mexico. The company said the Fort Smith facility, which has an estimated value of $700,000, will be sold.

“The consolidation of this facility into existing plants will help us to further streamline our manufacturing operations and better position us to grow profitably. I am confident this rationalization of our production facilities will make us a stronger organization overall and is the best long-term solution for Unique Fabricating and our shareholders,” John Weinhardt, CEO of Unique Fabricating, said in a statement.

The company makes foam, rubber, and plastic components used in sealing applications for the auto and industrial appliance market. The company was once a supplier to Whirlpool’s Fort Smith plant, which closed in June 2012.

“In connection with this closure, the company expects to incur charges of approximately $150,000 – $250,000 related to severance costs and approximately $400,000 – $500,000 related to equipment relocation, and other closing considerations. The cost savings to be realized as a result of the closure are expected to be approximately $600,000 – $700,000 annually,” the company noted about the Fort Smith closure.

Unique Fabricating also closed a smaller facility in Port Huron, Mich.

The Fort Smith metro manufacturing sector did get a boost when on Jan. 31 officials with Silgan Holdings confirmed plans to invest at least $38 million in Fort Smith and employ up to 150 when a 100,000-square-foot plant is fully operational. Silgan Holdings Inc. (NASDAQ: SLGN), a global supplier of rigid packaging for consumer goods products, operates 100 manufacturing facilities in North and South America, Europe and Asia.

Unfortunately, that was followed a few days later with news Walmart would close distribution operations in Fort Smith, a move resulting in the loss of 100-150 jobs. While not a loss of manufacturing jobs, the Walmart news also is a chapter in the story of the region’s inability to recover from overall regional job losses that begin in late 2006.

Fort Smith metro employment peaked at 125,426 in June 2006, but would fall below 120,000 in December 2008. The decline hit bottom with an estimated 108,396 jobs in January 2014. While not nearing peak employment, job numbers have improved, with regional employment estimated at 115,104 in December 2017.

MANUFACTURING SECTOR SHIFTS
The rapid decline in manufacturing employment in the region leveled off in early 2013 but has been unable to realize a growth pattern. Annual average manufacturing employment in the Fort Smith metro was 17,500 in 2013, rising to 18,100 in 2014, according to the U.S. Bureau of Labor Statistics (BLS).

The annual average fell to 17,900 in 2015 and rose slightly to 18,000 in 2016. The 2017 average, barring revisions, will fall to around 17,600. Peak employment in the sector was 31,200 in June 1999.

Manufacturing jobs in Arkansas have shown a small but positive growth trend since reaching an employment low of 152,000 in July 2013. Sector employment was 160,800 in December 2017, the latest BLS numbers available. Arkansas manufacturing employment set a record with 247,300 in February 1995.

After reaching an employment low of 11.453 million in February 2010, the U.S. manufacturing sector has seen steady employment gains. There were an estimated 12.555 million U.S. manufacturing jobs in January, up from the 12.369 million in January 2017. The January employment is an almost 10% gain from the low posted in February 2010.