American LaFrance has retooled its business strategy at the cost of hundreds of jobs, but executives said the deep cuts are necessary for the manufacturer to pull through the economic downturn and to maintain its financial backing.
The Summerville-based company notified workers Monday that it is closing its firetruck plants in Hamburg, N.Y., and Ephrata, Pa., and bringing that work back to its headquarters off Jedburg Road.
The consolidation will leave roughly 270 workers in New York and Pennsylvania without jobs, according to reports. Some were laid off immediately, and the rest of the positions are expected to be phased out by the end of May.
The company, which emerged from bankruptcy protection less than a year ago, said it also laid off 12 local workers Monday.
When the job cuts are completed, the company will have 280 employees, all in Summerville, where it currently makes garbage trucks.
Richard Ball, director of marketing and dealer operations, said American LaFrance's primary customers are government agencies, many of which are facing daunting financial shortfalls as the recession erodes their tax bases.
"Just about all of our business is municipal-related, and municipal budgets obviously are seeing an effect this year. But they're really going to see an effect next year," Ball said. "We have to make some tough decisions and ... this is our newest plant and our most modern plant. It's a tough choice, but you have to go with the times."
Bill Hinz, chief executive officer, added that the proximity of the Port of Charleston and tax incentives that are available in South Carolina also factored into the decision to locate the entire business in Summerville.
Hinz said that the payroll cuts and other restructuring plans are key to American LaFrance's long-term survival. He also said some of the jobs could be restored if the strategy is successful.
"The consolidation is absolutely the right thing to do," he said. "In this environment, it's the only way we'll come out the other end with a viable business."
The reorganization also came at the urging of the Patriarch Partners LLC, the New York-based investment fund that owns American LaFrance. Hinz said Patriarch's chief executive, Lynn Tilton, spent hours Sunday going over the new turnaround strategy with his executives before agreeing to continue funding the business.
Hinz said Patriarch's financial support "was contingent upon this plan."
As it was emerging from bankruptcy protection, American LaFrance announced last July that it was shifting its fire-truck business from Summerville to Ephrata and Hamburg, partly to open up room for new manufacturing ventures at its nearly 2-year-old Lowcountry headquarters.
Robert Bord, who learned he had lost his job as a welder at the Pennsylvania plant Monday, said work in his factory had been extremely slow and that partially completed firetrucks were sitting idle for months awaiting parts.
"We all knew something was coming. We did not expect this," he said Tuesday.
Bord said it was obvious that the firetruck line was being moved back to Summerville even though the company did not state that specifically when it announced the two plant closings Monday.
"We were told that people who are losing their jobs up here could — could — relocate to South Carolina, but they would not pay any travel expenses or anything like that," he said.
With roots that go back 177 years, American LaFrance is one of the best-known names in the firetruck business. Hinz said the company's plan is to offer five basic models that can be upgraded with additional features. Previously, it had custom-made each vehicle to a specific department's wants and needs.
The company also will focus more on expanding its garbage truck business. To that end, it has formed a joint venture with Navistar, an Indiana truck maker, to market its so-called vocational vehicles to buyers overseas.
Hinz noted that the heavy wear and tear that trash haulers endure means they need to be serviced and replaced more frequently.
"A garbage truck will start and stop 1,500 times every day, so spare parts, which we're going to pursue aggressively, will help us as we move through this, as well," he said.
The company also might begin making ambulances again, a business it exited after shutting down a Florida plant as part of its bankruptcy reorganization.
Once all of these efforts are in full swing, Hinz said, the payroll at the Summerville plant could get back to 500 workers, which was the number it employed when it opened the factory in mid-2007.
The turnaround plan also calls for American LaFrance to move its chassis business from a nearby local facility into the headquarters building. In addition, the company will be sharing space in the plant with Patriarch Partners-owned Protected Vehicles Inc., which designs and makes armored vehicles for the military market.
Putting out fires
American LaFrance LLCFounded: 1832Headquarters: 1090 Newton Way, SummervilleBusiness: Makes firetrucks, garbage trucks and other municipal vehiclesRecent events: American LaFrance moved its headquarters in 2002 to the Charleston area from Cleveland, N.C. At the time, it was owned by Freightliner LLC. Patriarch Partners bought the business in December 2005. American LaFrance sought bankruptcy protection in January 2008 after having lost $104 million over the previous two years. It also blamed a difficult transition between owners. It emerged from bankruptcy last summer.