June 26, 2003
45 years, Vernay’s Plant 3 will close its doors
Next month, the company will also begin marketing its Dayton Street facilities and its 46 acres of farmland on the northwest corner of Dayton Street and East Enon Road, Vernay President and CEO Tom Allen said last week.
Plant 3 will be the first local Vernay facility to shut down since the company announced in June 2002 the closure of its Dayton Street facilities. The newest of the three local facilities, Plant 3 was built in 1958 at a fraction of its current size to produce Vernay’s first product, a wax expansion thermostat that was used to monitor engine temperature in everything from automobiles to tanks and airplanes in World War II. Since then the plant has grown with three or four additions and focused mainly on producing synthetic and black rubber parts for the automotive industry.
Last year nearly 200 employees worked on more than 30 molding presses in Plant 3. But in the span of a year, 125 hourly workers have either been laid off or retired while Vernay has relocated most of the machinery to prepare for the first plant closure. In addition, the company has eliminated approximately 22 middle management supervisors and engineers in the process of moving most of Plant 3’s production to its other plants in Georgia and South Carolina. Of the 32 management personnel formerly employed in Yellow Springs, only 5 remain in town and another 5 have transferred south, Plant Manager Mike Maloy said.
According to Allen, the company has already benefited from the cutbacks.
“Closing the larger plant will have a positive effect, and we’re starting to see encouraging signs from those reductions,” he said during an interview last week. “The fixed costs and tax depreciations we won’t see until we sell the building.”
Last year, when the plant closings were announced, Vernay officials said the decision to shut down the facilities was made to keep Vernay financially healthy. The company also cited as reasons for the closures its desire to be closer to its emerging customer base in the South; its excess manufacturing space in North America; and Vernay’s required cleanup of its Dayton Street property, where groundwater and soil contamination have been found.
Plans for Vernay properties
Ultimately, Vernay would prefer to sell all of its property on Dayton Street, Allen said. But given the potential complications involved with the environmental cleanup on and around the facilities, the company will first seek to lease Plant 3 or the property, or both. Vernay will begin actively marketing its property next month, Allen said.
Village officials and members of Community Resources, the local community improvement corporation, toured the plants and both properties two weeks ago to scout out a potential location for a local commerce park, Sam Bachtell, a member of the Community Resources board said. Community Resources began talks with Vernay early this spring when Village Council, through the cooperative economic development agreement (CEDA) it signed with the Miami Township trustees, charged the group with securing property for a development. Council agreed to provide up to $200,000 for this purpose.
Community Resources is also considering 30 acres of the Pitstick farm just north of The Antioch Company on East Enon Road for a development site. Both the Vernay and the Pitstick properties are zoned industrial and are accessible to roads and utilities, essential factors for a commerce park, Bachtell said.
Allen said that Vernay has been open to selling its farm land for several years, but management is now prepared to actively look for buyers.
Vernay intends to work with the Village to find a business or developer that is an “appropriate fit,” he said. “We understand it’s a fairly sensitive issue with the building, and our corporate offices are going to be here for a while so we don’t want it to create any adverse situations for us.”
Vernay will begin closing the smaller medical plant, Plant 2, on Dayton Street in the first part of next year. The 43 remaining manufacturing jobs will be relocated on a job-by-job basis, like in the larger plant, and closure should be complete by this time next year.
The 55 management, engineering and research employees will remain at headquarters on East South College Street until an unspecified date, Allen said, though he has said in recent months that the company may relocate its headquarters when the environmental cleanup is finished, which could occur after 2005.
State of the workers
According to plant managers, the process of moving local operations south has been relatively smooth for the company as a whole. Maloy said he and personnel employee Robin Thompson have been available to offer support and advice to the workers.
“I’m on the floor every day to talk to people, and they come in asking me what’s going to happen, both salary and hourly people,” Maloy said.
Many Vernay employees were surprised and upset last June when they were first notified of the closing and the job cuts. Some who had put in over 25 years with the company felt betrayed and several dozen left for early retirement. The company then shifted its projected layoff schedule a few months later, and some workers began to distrust upper-level managers.
But the schedule has remained fairly steady over the last few months, and the plants have remained open about six months longer than originally expected, according to Vernay’s union representative Ralph Foster, who started out as a worker in Plant 3 and has since become one of the small group of employees still left in Plant 2.
“There’s been no big surprises, we knew there would be ups and downs and that things just change on [short] notice,” he said in an interview last month. “I don’t think any of the union people hold any animosity against management.”
Several employees have spoken of their dissatisfaction with reduced retirement and benefit packages, but Vernay managers think the process has been fair.
“We’ve tried to provide as generous a package as we could possibly afford at this time,” Allen said.
The company’s perspective
Vernay still feels the pressures of running an unprofitable North American operation and a $7.5-million environmental cleanup, which led to the decision to close the plants last year, Allen said. But, he said, Vernay could have done things a little differently from the beginning.
“When these environmental problems arose we needed someone that would view us as a friend, and that did not initially happen,” Allen said. “We could have chosen to work through this problem in a constructive and efficient manner, but unfortunately we chose otherwise, and it had a very negative effect on Vernay as a business.”
Then came the announcement that the company was leaving town, which added a bitterness to an already tenuous relationship with the community, he said. Though, he added, given the country’s economic recession and Vernay’s customer base shifting toward the south, the eventual outcome would have probably been the same.
Allen said that he accepts the risk involved when any business exists within a community, but he said that the two should work through issues of safety and environmental concern together.
“It looks to me like the village has modified its approach and is attempting to do better,” he said. “Yellow Springs couldn’t stand alone as a business center without the support of the Dayton area and this isn’t the cheapest location . . . but it certainly isn’t uncompetitive.”