FORT SMITH — Whirlpool Corp. said Thursday that it will close its Fort Smith manufacturing plant by the middle of next year, putting about 1,000 people out of work.
The company cited shrinking demand for its main product - side-by-side refrigerators - and the sluggish economy for the closing.
“While Fort Smith certainly has produced top quality products consistent with our long-standing strategy, we have not been cost competitive due to the extremely low production volumes at the facility,” Al Holaday, vice president of integrated supply chain and quality for Whirlpool, said in a news release announcing the coming closure.
The company said it would shift production of side-by side refrigerators to a plant in Mexico, of trash compactors to a plant in Ottawa, Ohio, and of built-in refrigerators to a plant in Amana, Iowa.
Clyde Dailey, a plant employee and steelworkers union representative, said the company’s decision was made despite efforts by the union to negotiate and by the state to put together an incentives package.
“Everybody who was involved in this or had a stake in this was willing to sit down and talk,” he said. The union soon will request bargaining sessions over severance pay, he said.
Whirlpool said discussion of “transition assistance” will begin immediately.
The plant’s closure will have a ripple effect throughout the region, said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas’ Walton College of Business.
“It’s obviously devastating to lose that many jobs, and from a core industry,” she said, noting that large employers such as Whirlpool develop clusters of related suppliers.
“You have the center of the cluster being pulled out,” Deck said. “The ripple effect goes through all those industries.”
Whirlpool employees interviewed Thursday said the news about the closing was not a surprise.
“A lot of people took it pretty hard, but there have been rumors for three months or better that they were going to shut the place down,” Frederick Denney said.
Plant officials set up speakers in one section of the sprawling factory and gathered all workers about 1:30 p.m. Thursday for the announcement and a question-and-answer session. Managers also pledged to seek a buyer for the plant that could employ the work force.
“When the meeting was announced, everybody knew it was bad news,” said a worker who has been with Whirlpool for more than 40 years and who asked not to be identified.
“There was a lot of sadness. Most of the people left there are long-term employees,” said another Whirlpool worker who asked not to be identified. He moved from Louisiana 35 years ago to work for Whirlpool, attracted by its pay and benefits.
He said he would have preferred to work there another five years, adding, “you don’t always have what you want.”
The unemployment rate in the Fort Smith Metropolitan Statistical Area was 7.9 percent in August 2011, the most recent data available.
That figure represented no change compared with the same year-ago period. However, in August 2008, the unemployment rate was 4.7 percent for the area that is made up of Sebastian, Crawford and Franklin counties in Arkansas and Le Flore and Sequoyah counties in Oklahoma.
The manufacturing sector in Fort Smith employed about 21,400 people in 2010 - the most recent data available. That figure was little changed from the 21,700 people employed by that sector in 2009, according to U.S. Bureau of Labor statistics.
The area’s work force totaled 133,700 people in August, according to state data.
Whirlpool is to release its third-quarter report today. Last quarter, it reported a $161 million net loss and noted difficulties related to various disputes and antitrust-related matters. Its second-quarter sales performance in North America was down 7 percent in the year-over-year comparison.
The company is expected to post a profit for the quarter that ended Sept. 30.
The appliance maker had record-setting unit volumes and sales in 2006 and 2007 but has struggled since its 2006 $1.7 billion purchase of rival Maytag Corp. of Newton, Iowa.
Whirlpool shares closed at $60.47, up $1.93 or 3.3 percent, in trading Thursday on the New York Stock Exchange. Shares have traded as low as $59.92 and as high as $111.84 over the past year.
Fort Smith’s manufacturing sector has been hard-hit in the past year.
In late June, Rheem Manufacturing Co. said it was moving 250 jobs from its Fort Smith operation to Mexico, and residential air-conditioner manufacturer Trane Inc. said in October that its Fort Smith plant would shed as many as 176 jobs by the end of the year.
In January, 117 people lost their jobs when Southern Steel and Wire Co., a Whirlpool supplier, closed its operation in the city.
Elsewhere in the state, in late June, Searcy-based Yarnell’s Ice Cream Co. closed, leaving about 200 people without jobs. On April 1, Petit Jean Poultry Inc., based in Danville, shut down its deboning plant,eliminating 385 jobs.
In March, Domtar Corp., Little River County’s largest employer and the largest manufacturer of printer paper in North America, said it would cut 110 jobs at its Ashdown plant by July. The Montreal-based company cited the declining demand for printer paper as the reason for the job cuts.
However, there has been some good employment news for Fort Smith in the past year.
In October 2010, construction began on a $100 million Mitsubishi Power Systems Americas Inc. plant that will assemble wind-turbine enclosures, or nacelles. When complete, the plant is expected to employ more than 300.
Also, an estimated 600 jobs are expected to be created in the coming years at a call center operated by Sykes Enterprises of Tampa, Fla., that opened this year.
In March, Golden Living, a national geriatric-services provider, said it would add 200 jobs as it consolidated its billing operations. At the time, the company employed more than 600 in the city.
The city’s top employer is Baldor Electric Co., with more than 2,300 workers, according to the Fort Smith Chamber of Commerce. Baldor Electric was acquired by European partner ABB Ltd. in January in a $4.2 billion merger.
The Whirlpool plant’s peak employment was in August 2005, when about 4,600 people worked there.
The head count began dropping below 4,000 in 2006, when Whirlpool opened a refrigerator manufacturing plant in Ramos Arizpe, Mexico.
Whirlpool reported laying off 930 hourly workers at the Fort Smith plant in September 2006, citing the job transfers and the sluggish economy.
Whirlpool continued to lay off workers, sometimes as production was shifted to Mexico and at other times as the economy worsened.
The country’s recession began in the mid-fourth quarter of 2007 and ended in 2009. A recession is often defined as two or more consecutive quarters of negative gross domestic product output. Gross domestic product is the sum of all goods and services produced in the nation.
In August, when the demand for major appliances remained at recessionary levels, the company reported beginning a “study of options” for its Fort Smith facility.
“Like the employees, I’m feeling sad, hurt, disheartened in some respects,” said Fort Smith Mayor Sandy Sanders, who retired from Whirlpool as manager of human resources. He had worked 32 years at the plant. “The people here have done everything possible to make this plant succeed. This is a highly efficient plant. The quality of product is excellent.”
But that effort couldn’t overcome the slow demand for appliances in general linked to the nation’s housing market meltdown.
“We have to refocus as a city to overcome this,” Sanders said. “Fort Smith has long relied on its manufacturing base, and it’s still an important part of our economy. But we have to also grow new types of jobs. It’s a sad day, but it’s a challenge.”
Sanders said area leaders will meet with Whirlpool managers to market the building to other companies. The rambling blue structure is among the largest in the area, with about 1.2 million square feet of manufacturing space, he said.
Information for this article was contributed by Laurie Whalen and John Magsam of the Arkansas Democrat-Gazette.
Front Section, Pages 1 on 10/28/2011