Racine-based thermal management product manufacturer Modine Manufacturing Co. announced conditional plans to close its manufacturing plant in Washington, Iowa. The company said the decision is dependent upon the conclusion of bargaining with the union at the Washington facility. The closure would impact approximately 245 full-time employees.
The Washington plant makes liquid charge air coolers, plate oil coolers and fuel coolers for the automotive, commercial vehicle and off-highway markets. Modine plans to transfer the Washington production to other facilities in North America, including those in Nuevo Laredo, Mexico; Joplin, Mo.; and Jefferson City, Mo. Plans call for the plant to close over an approximate 24-month period.
“Closing operations is never easy,” said Scott Wollenberg, regional vice president – Americas. “However, our analysis of Modine’s global product lines and North American manufacturing strategy led us to conclude that the best long-term solution for Modine and its shareholders is to consolidate all the Washington products into other North American facilities. Closing the Washington plant will help us rationalize production, maintain the scale we need in our manufacturing operations and improve our overall competitiveness and profitability. We are committed to making the transition as seamless as possible for our customers and to assisting our affected employees during the transition.”
In connection with the upcoming closure, Modine expects to incur a charge of approximately $2 million in the first quarter of its 2016 fiscal year, primarily related to anticipated severance payments. In addition to temporary inefficiencies, the company anticipates to incur total closure costs of approximately $3 million over the entire closure period.
Modine forecasts it will generate annual savings of at least $9 million once the closure is completed in fiscal 2018. In addition to achieving savings, it predicts the consolidation will result in additional revenue opportunities and growth in vehicular markets due to the more competitive cost structure.