In a sizeable setback to Radford’s economy, Grede Holdings LLC, which holds the pink slip on the city’s foundry, announced Thursday its intention to shut down its Radford operation by the end of the year. The shutdown will eliminate 234 hourly and 28 salaried jobs, many of which are held by city residents.
The facility, located at 1701 West Main Street, which creates metal components for use by the automotive, transportation and industrial markets, is headquartered in Southfield, Mich., and operates 14 foundries and four machining operations in the United States, and two foundries in Mexico.
Public relations representative Richard Pacini told the News Journal on Thursday afternoon that Grede (pronounced Grady) will continue operating on a limited basis through the end of the year, and will officially shut down around Dec. 31.
“Obviously it’s a difficult business decision, a financial decision, that the company had to come to — that’s what’s happened here,” Pacini said.
The foundry has changed hands three times since 2008. Grede acquired it in March 2012, and two months later a fire destroyed one of its two furnaces. A new furnace as purchased and installed, and has been up and running for some time, but Pacini said the cost of the furnace and revenue lost played into the company’s decision.
“The aftereffects of the May furnace fire and the cost there combined with other factors,” he said. “It was really the lack of competitive cost structure within the plant and the state of the economy that led us here. This was purely a business decision.”
Pacini said Grede is “idling” the plant, and explained there is a difference between idling and withdrawing.
“The plant is being idled — that means there is, perhaps, the small possibility that it could eventually come back, but no decisions or timeframes have been made or set up in that regard,” Pacini said.
Some of the company’s employees, he said, — a handful of the 28 salaried workers — will have the opportunity to apply for positions at other Grede sites around the country, as well as being given a severance package. The rest will be offered a retention incentive to stay on until the official shutdown, but will then simply be out of a job.
City officials were briefed on the company’s decision earlier this week, and staff members were notified Wednesday that they would soon be out of work.
“I’m just surprised,” said Vice Mayor Dr. Dick Harshberger. “I know they had a few issues. I think the furnace fire set them back significantly — you can imagine the impact losing one of your two furnaces would have on your business. I guess they had a little trouble recovering.”
“(The foundry) is important to Radford. I’m sorry circumstances predicated the decision to idle it,” said Mayor Dr. Bruce Brown. “They invested heavily in the plant — it’s a commentary on the vulnerabilities in the marketplace right now.
“We had a great relationship with them, and I think everything we could have done to help them along we did — hopefully the market will rebound and circumstances in the metal manufacturing business will improve and they’re able to reopen.”
Radford economic developer Basil Edwards gauged the impact of the foundry’s closing to well beyond the city’s borders.
“This is going to affect the New River Valley as a whole,” he said. “Workers come from all over. It’s unfortunate for the families that are relying on those jobs for their income.”
He also estimated the impact on city businesses as well.
“They buy all their office supplies and safety gear locally. Our restaurants will surely be impacted, Wade’s grocery store is nearby, certainly Bucko’s convenience store across the street,” Edwards said. “The foundry business is a tough one. The industry as a whole has changed in the United States, and there is a lot of pressure coming in from foreign companies. Basically the cost of doing business right now makes it difficult for foundries to survive.”
Edwards said Grede would keep a minimal staff at the foundry to cycle the machinery and keep everything in working condition, just in case they needed to fire it back up in the future.