Window manufacturer Pella Corp. said Wednesday it would close its Story City plant, laying off 244 workers in early March, the result of the nation’s housing crisis hitting home.
“After doing everything we could to deal with the housing decline, which is deeper and more widespread than anyone predicted, we must close this facility to reduce excess manufacturing capacity,” said Denny Van Zanten, Pella’s corporate vice president, in a statement.
Foreclosures in the subprime market have rippled through the national economy, roiling U.S. and foreign markets, bankrupting lenders and pummeling the home-building industry.
Kathy Krafka Harkema, Pella’s spokeswoman, said Wednesday the company has no plans to close its other Iowa plants in Sioux Center, Carroll, Pella and Shenandoah.
After the layoffs, the Pella-based company will employ 5,300 Iowans. Nationwide, it will employ 9,800 workers. “Our intention is to continue operating the existing facilities given the current demand,” she said.
The company, however, has cut worker hours across the state to adjust for declining demand for residential building supplies, which has fallen as much as 50 percent since 2005, Harkema said.
Pella chose to close the Story City plant, a facility that opened in 1997, because it is the company’s smallest in Iowa. “We had done a lot of things to cope with the housing crisis, but it simply became necessary to close a facility completely,” she said.
Pella said 40 “flex” — or seasonal — workers in Story City would also lose their jobs.
Van Zanten said the “continued erosion in the American housing economy” was finally hitting Pella.
The turmoil in the mortgage industry has caused concern about a U.S. recession, and the wear is showing on Iowa companies.
Last week, Regency Homes, Iowa’s largest homebuilder, said it had appointed a chief restructuring officer after homebuilding activity fell 43 percent this year compared to 2005 and the company had cut its homebuilding staff by 40 — or almost in half.
San Francisco-based Wells Fargo & Co., Iowa’s largest employer, said in November it expects to lose $1.4 billion from weak home-equity loans in the fourth quarter. Wells Fargo leaders in Iowa have said they hope gains in businesses such as loan servicing will help offset lending losses and possible layoffs.
Story City officials said the Pella is one of the city’s largest employers.
“Obviously, we’re shocked by the news,” said Mark Jackson, Story City administrator.
City officials asked Pella representatives Wednesday afternoon what it would take to keep the plant operating. “They said there was nothing at all we could do,” Jackson said.
In fact, Pella said it will decline use of part of a $500,000 forgivable loan Iowa economic development leaders approved for the company in 2006. The company had planned to add 100 workers each at its Carroll and Story City plants.
Harkema said she’s unsure how much of the loan was for the Story City location.
Harkema said the company will provide workers a severance package and help workers find new jobs, including any available positions within Pella Corp.
The company also will have counselors on hand to work with employees, she said. “We love Story City and hate to close the facility,” said Harkema. “We’ll do what we can to help our team members.”
Pella plans to use the 400-000-square-foot manufacturing plant for storage, the company said.
Story City Mayor Kenneth Peterson said “Pella was an excellent corporate friend.
“Right now I don’t know what the economic” impact will be, he said.
Peterson said the city has gone through plant closings in the past and survived.
Butler Manufacturing closed in the early 1980s and was replaced eventually with American Packaging, which continues to operate in Story City, he said.
The city has been actively seeking out new manufacturing companies, with an eye on finding someone to occupy 35 acres it owns near the Pella plant, he said.
It’s questionable, though, whether the area can absorb the jobs that will be lost from the Pella plant, Peterson said. Many of the plant’s workers live in nearby communities. “I don’t know of too many companies that are hiring right now,” he said.
Labels: Iowa, layoffs, Pella
