Human Resources, Manufacturing, and Real Estate

Logistics supplier considers moving 300 jobs to Mexico

January 7, 2016
TAGS Dematic / jobs
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Logistics supplier lays off 75
Dematic makes logistics equipment and software, such as container shuttles for plants, warehouses and distribution centers. Photo via

A logistics supplier with 1,200 employees in Grand Rapids is considering closing its plant in the city and moving 300 manufacturing jobs to Mexico.

Dematic, which has its U.S. headquarters in Grand Rapids and its global headquarters in Atlanta, said yesterday that it’s contemplating moving the jobs, which include fabrication, assembly, warehouse and plant administration positions, to its facility in Monterey, Mexico.

The company’s Grand Rapids plant makes conveyor and sortation equipment.

Rob Arguelles, Dematic EVP of Global Operations, said a final decision will be made based on cost and productivity.

“This is purely about economics and how can we provide productivity and cost performance,” Arguelles said. “We are continuously evaluating and benchmarking all of our facilities — where can we get the best level of productivity and cost performance in line with the market demands and that process is part of our standard management system.”

Arguelles said the company will look at the Grand Rapids cost structure and determine the best course of action for the business in relation to its growth goals.

“This is a global question and a global issue of macroeconomics and managing total cost of ownership and manufacturing,” Arguelles said. “As we leverage our existing footprint that we have around the world, we are now at a point where we need to contemplate a strategy with our Grand Rapids manufacturing.

“We are a market leader in our space and to position ourselves and maintain our market leadership, it’s important that we always monitor and control our costs, because the cost equation, at the end of the day, is one of the strongest forcing function drivers on the acquisition of the business and maintaining the viability of our growth and to protect the future of our 5,000 employees around the world.”

Arguelles said the company will enter bargaining conversations with the UAW as part of its decision-making process.

Those conversations will include a side-by-side comparison of wages, productivity targets, total cost of ownership and all other business model elements.

“The end objective is we have a business case that we agree to and that business case drives us to the next step,” he said.

Arguelles didn’t have a timeline for making the decision, saying it could take a few weeks or perhaps a month or it may happen more quickly.

Dematic said if the plan it’s considering is implemented, “most production activities” will be transferred to its facility in Monterrey, Mexico over a roughly six-to-nine-month period, likely beginning early this year and concluding in September.

The company also said it’s “dedicated to working through the transition with affected employees, including retaining as many employees as possible,” if the decision is made to close the Grand Rapids plant.

Arguelles emphasized that a final decision has not been made at this point.

He also noted Dematic’s Grand Rapids operation includes 900 positions that would not be part of the relocation.

“We will still have 900 highly paid, white-collar employees that aren’t affected by this decision, and quite honestly, they will benefit from us trying to improve our productivity, because we will add to the tools available to them to grow.”

Dematic has 5,000 employees worldwide, with other facilities located in China, Italy, Germany and Australia.

UAW Local 1485 President Scott Wahlfeldt could not be reached for comment prior to publication.

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