Generac to move work from North Dakota to Wisconsin

Oil and gas market drives earnings and revenue down in Q1

Generac generator
A Generac home standby generator.

Waukesha-based Generac Holdings Inc. plans to move work for its MAC heaters from North Dakota to facilities in Berlin, Wisconsin as part of a restructuring aimed at addressing continued weakness in the oil and gas market.

Generac generator
A Generac home standby generator.

The company expects to save $4 million to $5 million annually with the move, which is expected to be complete by July. Generac recorded a $7.1 million pre-tax charge because of footprint adjustments, headcount reductions and other writedowns in the first quarter of 2016.

“While these cost reduction actions are significant, we believe they are necessary to address the adverse impacts from the severe and extended downturn in energy prices,” said Aaron Jagdfeld, Generac president and chief executive officer.

Bismarck-based MAC Inc., a maker of premium-grade commercial and industrial mobile heaters, was acquired by Generac in 2014.

Generac currently owns a 50,000-square-foot manufacturing and office facility in Bismarck. The decision to close the facility will affect 73 employees, with 50 already terminated in February.

The company has two facilities in Berlin with a combined 321,500 square feet of space. The production requirements for the MAC heaters will be met by the current Generac staff in Berlin.

The weakness in oil and gas markets not only caused Generac to restructure its operations, but also drove down revenue and earnings.

Net income was down 48 percent to $10.2 million during the first quarter of fiscal 2016. The company reported diluted earnings per share of 15 cents, down 46 percent from the previous year.

Revenue was down 8.1 percent to $286.5 million, including $37.2 million from recent acquisitions including Italy-based Pramac.

Generac’s residential product sales were 1.4 percent to $159 million, mostly driven by acquisitions and offset by a decline in shipments of home standby generators. The company said a mild winter and a slight increase in power outages led to an increase in generator activations, but faced a tough comparison to the previous year quarter.

Commercial and industrial sales were down 23 percent, mostly due to a decrease in shipments of mobile products into oil and gas and general rental markets.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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