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Archive for Thursday, June 23, 2011

Eaton Corp. carries on 5 years after almost closing Hutchinson plant

June 23, 2011

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— Five years after Hutchinson convinced the Eaton Corp. not to close its hydraulic manufacturing plant and move 450 jobs to Mexico, company officials say the plant is gaining employees and building manufacturing momentum after surviving recent U.S. and global recessions.

While the facility still produces equipment parts for the agricultural and construction equipment manufacturing industries, plant manager Tony Niese said it has changed its business focus and reorganized seven core areas to produce thousands of individual products, The Hutchinson News reported.

"We're a high-mix, low-volume plant now," Niese said. "That's our norm. Our orders are relatively small, compared to others. But we can quickly change over our machines. Because our products are diverse, we need an experienced workforce that's very good at what they do."

Where other plants might manufacture 1,000 pieces for an order, the Hutchinson plant might get just 16 in a batch.

"We'll run that batch, and then change the machine over to run another batch that's slightly different. We do that several times a day."

Eaton had shocked the city in 2006 by announcing that the plant was one of four in the country that it would close, saying it had become inefficient and had too much floor space and a lack of manufacturing complexity.

The company's contract with its union workers required it to give employees 30 days to devise a plan to prevent the closure. City, county and Chamber of Commerce officials quickly developed a proposal that included $1.5 million in local and state funding to demolish nearly half of the 700,000-square-foot plant.

Eaton officials announced in August 2006 that the plant wouldn't close, although about 150 assembly jobs were lost to Mexico.

Nearly a year later, Hutchinson officials decided to market the extra space, rather than tear it down. The $1.5 million pledged by the city and county were used to buy 286,000 square feet from Eaton. That area was transferred to Sunflower Wind, a wind turbine manufacturer, for about $300,000. Sunflower Wind still owns the space but it's being used to store wheat.

Eaton used a portion of the funding it received for improvements to its side of the plant. The company received another $750,000 toward plant improvements and $773,000 for training. And state lawmakers authorized $2 million, which Eaton is required to reimburse over 10 years through state withholding taxes of the plant employees. As of this month, Eaton had repaid $1.27 million, according to the state treasurer's office.

By 2008, Niese said, "we were humming along pretty well." Then the economic decline hit. The plant had its lowest employment near the end of 2009, with 123 hourly and 24 salaried employees.

"We started to grow again in 2010," Niese said. "By Dec. 31, we grew to 187. Today we're at 194."

Human Resources Director Vadzim Piuneu said the first shift is full and the second shift is about half-full. The plant recently started a third shift, which has crews of about 15 people.

The plant has made a significant investment in new equipment over the last two years, Niese said, with several million in upgrades. It also improved its sustainability by installing new lighting and measuring its water usage, greenhouse gas emissions and other waste.

Niese said the plant reduced its water usage last year over 2009 by some 43 percent, while business was actually up. A lot of the savings was through re-circulating the water, such as operating boilers for heating.

"We're talking about swimming pools worth of water," he said. "Our gas and electric usage are also down. Gas is down 30 percent over last year and electricity is down 25 percent."

Last year, the company completed contract negotiations with workers that provided wage and benefit increases — the first since workers agreed to wage concessions to keep the plant in Hutchinson. The contract extends through 2013.

"There's also more opportunity for cross-training," Piuneu said. "With more machines, when business is good there's more flexibility to move around and then to be able to work overtime."

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