Saint Jean to cut 300 by year’s end in Heber Springs

The loss of a key General Motors contract is forcing Saint Jean Industries to cut 300 employees from its Heber Springs plant by the end of the year.

The layoffs, effective Dec. 31, will reduce the plant’s workforce to 40 employees, according to a news release.

“Whenever automobile makers change design, car styles, and parts, suppliers like Saint Jean Industries, can experience turnover in contracts,” the company said in a prepared statement. “This leads to excess capacity in plants and a need for fewer employees. Unfortunately, due to these circumstances, Saint Jean, has been one of those suppliers that have been affected by their customers.”

“With that loss they had no choice but to scale back at the end of the year,” Heber Springs Mayor Jackie Mcpherson said Monday.

In an email response to a question about the contract, Saint Jean human-resources manager Aimee Branscum said discussions with General Motors “are still in progress.”

Mcpherson said Saint Jean Industries was hurt by the financial crisis a few years ago and reduced its workforce to fewer than 100 employees, but the company was able to build it back up.

“They’ve been through difficult times before and they’ve weathered the storm,” he said.

The layoffs will raisethe unemployment rate in Cleburne County to a 2011 post-recession level, said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville.

The county, which had a labor force of 11,298 as of August, could see its unemployment rate rise from 7.1 percent to 9.7 percent.

“So that’s a big hit,” Deck said.

Saint Jean Industries, an automobile parts manufacturer based in Saint-Jean d’Ardieres, France, said in its statement that it is working with new customers, Gov.Mike Beebe, and the Arkansas Economic Development Commission on “a strategy to acquire new businesses and bring the company back to where it is today and beyond, allowing the employees to return as soon as possible.”

The Arkansas Economic Development Commission is working to find “opportunities for Saint Jean to fill excess capacity in its operation in the short term and limit the impact on the company’s employees,” the commission’s Executive Director Grant Tennille said in a statement.

“While we cannot speak for Saint Jean, we have been working extremely closely with Saint Jean’s leadership to assist the company in any way we can,” Tennille said. “As designs and needs change in the automotive industry, parts suppliers like Saint Jean can experience turnover in contracts with auto manufacturers, leading to excess capacity in plants and a short-term need for fewer employees.”

The commission said Saint Jean Industries will not have to repay any of the state incentives it has received.

In 2011, the company was given an income tax credit of 1 percent of payroll for new jobs for five years and a sales tax credit based on investment, commission spokesman Joe Holmes said.

Saint Jean Industries also received a $500,000 Community Development Block Grant to upgrade a loading dock and parking area for trucks, and another community grant loan of $650,000 foran equipment purchase.

The company also received two other Community Development Block Grants in recent years: a grant of $1.35 million for an air filtration system in 2012 and, a $650,000 grant in 2013 for equipment and facility maintenance.

Matt DeCample, spokesman for Beebe, said the state is going to continue to work with Saint Jean Industries and hopes the company will acquire new contracts.

“Of course the governor’s disappointed to hear the news out of Heber Springs, but that’s the nature of the business that Saint Jean is in,” he said in a message. “As times change and demand changes from the companies they contract with, this is what happens sometimes.”

Front Section, Pages 1 on 10/29/2013

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