Following Joy Global plant closure, WMEP says manufacturing still ‘strong’

Joy Global
Joy Global's Milwaukee production facility at 4400 W. National Ave.

Several high-profile Milwaukee area manufacturers, including Johnson Controls Inc. and GE Power & Water, over the last few months have announced major layoffs and plant closures.

Another one was added to the list today, as Milwaukee-based Joy Global Inc. announced it will be laying off 56 employees when it closes its Orchard Street plant and moves work to Texas beginning in January.

In response to this latest news, Wisconsin Manufacturing Extension Partnership executive director and chief executive officer Buckley Brinkman said manufacturing is still a strong and vibrant career.

“We have to be really careful to keep these closings in perspective,” he said. “Joy Global is in the middle of the mining sector, and that sector goes through tremendous swings back and forth.”

Even so, he said it is one sector out of a “diverse manufacturing climate” in the country and state.

Brinkman said there are 37 driver industries in the state, 36 of which are in manufacturing. He also said 470,000 employees work in manufacturing and that number has “steadily been growing.”

“My perspective is manufacturing is a strong and vibrant place for someone to have a career, especially if it’s in one of the strong demand areas,” he said, citing computer-controlled machines, welding and engineering. “And it’s still one of the highest-paying sectors in the state. I’m extremely bullish on manufacturing.”

According to the most recent Marquette-ISM Report on Manufacturing, the Purchasing Managers Index was at 46.66 in October, up from 39.44 in September. Any number more than 50 indicates growth, while less than 50 signals contraction. The PMI has been in negative territory for seven straight months.

“It showed significant improvement,” Brinkman said of the most recent PMI. “It reflects what we’re seeing out there: slow but steady progress.”

He said it is natural for manufacturers, no matter the sector, to experience ebbs and flows. Thus, employees must have transferable skills and employers need to be constantly updating, innovating and improving.

“Otherwise, they can become one of those headlines,” he said.

In addition to the Orchard Street closure headline, Joy Global announced on Friday that 69 employees will be laid off when it closes its conveyor plant in Salyersville, Ky., on Nov. 13.

“That closure is for the same reason as Orchard: demand and work are down across the board, so we’re consolidating operations to make better use of our global footprint,” said spokeswoman Caley Clinton. “Services now handled at the facility will be transitioned to other locations in Joy Global’s worldwide network. As with Orchard, we are doing everything we can to help our employees manage this news and prepare for the upcoming closure.”

These are the not first layoffs and plant closures to be announced by the company as of late.

Last week, Joy Global announced the elimination of 26 salaried employees in Milwaukee. Clinton said those positions are from operations, engineering, supply chain and product management.

The Wisconsin Manufacturing Extension Partnership says manufacturing is still strong despite recent plant closures and layoffs at companies like Joy Global.
The Wisconsin Manufacturing Extension Partnership says manufacturing is still strong despite recent plant closures and layoffs at companies like Joy Global.

Also, in late September, Joy Global announced it will temporarily close its Original Equipment department at the Milwaukee facility located at4400 W. National Ave. Beginning Nov. 30, 113 workers will be laid off, including 109 union workers and four non-union workers.

In that WARN mass layoff filing with the state, Joy Global revealed that it has laid off more than 150 employees prior to Sept. 30 because of declining sales at the company, who also have recall rights.

The current number of Milwaukee employees is 1,001, but Clinton said that does not include the 60 Orchard Street employees. Joy Global has 14,000 employees worldwide.

Joy Global says it is weathering one of the toughest mining markets in years.

In its most recent quarterly report, the company’s profits were down 37 percent. It reported fiscal third quarter net income of $44.9 million, or 46 diluted earnings per share, down 37 percent from $71.3 million, or 71 diluted earnings per share, in the previous fiscal third quarter.

The company’s net sales for the quarter were down 9.5 percent to $792.2 million.

“Our financial results for the third quarter reflect an end market environment that is one of the most challenging seen in decades,” said Ted Doheny, Joy Global’s president and CEO. “The further step down in commodity prices resulted in projects getting delayed and a lock down on cash from our customers which impacted our service business. We are accelerating our facility optimization plans and taking additional cost reduction actions to align with lower market demand. (It was a) tough quarter for us…”

Declines in commodity prices, slowing economic growth in China and slower than expected growth in the U.S. have hurt Joy Global’s performance, the company said, adding that the global mining industry remains strained as miners navigate through a sharp and prolonged downturn.

When asked if Joy Global is planning any other future layoffs and closures, Clinton said, “As indicated in our Q3 earnings call, we’ve continued restructuring activities in Q4 to better align the company’s workforce and overall cost structure with the current and anticipated levels of demand. These steps are necessary to address the toughest market conditions our business and our customers have ever seen.

“These are never easy decisions to make, but our strategy to remain competitive in this tough market is to look at the company as a whole and position ourselves for future success. Demand is down and we have to adjust to focus on what will be needed for the long term.

“We continue to evaluate the business and workload on a regular basis, adjusting as necessary to remain competitive in this challenging market.”

Sign up for BizTimes Daily Alerts

Stay up-to-date on the people, companies and issues that impact business in Milwaukee and Southeast Wisconsin

No posts to display