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05. October 2008

USA - Nearly 400 local workers to be affected by Citation's plan to close Lufkin foundry

Citation is closing its Lufkin foundry because of a slowdown in the automotive industry, a move that will affect 375 local workers.

"After further assessment and the continued lower production demand, we have made the difficult decision to close our Lufkin facility," Cary Wood, chief operating officer for Citation, said in a press release. "The closing ensures Citation remains a viable and competitive player in the castings industry and positions us for future growth in the transportation market and other growing sectors of our business."

Affected employees, which include 35 people on salary and 340 hourly workers, will receive job counseling through WorkForce Solutions Deep East Texas and the Department of Commerce and Economic Opportunity, according to the company.

The news comes three months after the company announced that it would be reducing its Lufkin workforce by 128 hourly and salaried employees by the end of September. At the time, the Lufkin foundry had a total of 466 workers.

Paul Parker, Lufkin's city manager, said that while Citation has struggled in the past several years with the cost of materials and transportation, he still was surprised by the company's decision to close the local plant.

"It's a terrible disappointment to the city to see Citation close," Parker said. "It will have a tremendous effect on not only the individuals affected but the city economy as a whole."

Angelina County Judge Wes Suiter responded in similar fashion: "That will be a tremendous loss to this community. Any time you lose 350-plus jobs, it's going to be tough to absorb those. (Citation employees) are going to need some support out there. That's going to impact a lot of families in this community — especially on the heels of, not too long ago, the loss of the paper mill."

Citation announced in a letter to its employees its intention to close or sell the Lufkin facility by March 2009.

"This has been a very difficult decision given Lufkin's long-standing history and its many great people," a company executive wrote in the letter. "Unfortunately, the light truck market has collapsed (where a majority of Lufkin's product is used) due to $4 gasoline and $100+/barrel oil prices. To make matters worse, our customers do not see the light truck market returning to its previous sales levels as fuel efficient vehicles become more in-demand. Therefore, the business case to make Lufkin a sustainable operation is not viable. We will work with our customers to transition this business to Brewton, Alabama, if capacity is available, or to another foundry supplier."

Texas Foundries, Inc., began operations at the Lufkin foundry, on North Raguet Street, in 1939, according to local historian Bob Bowman's "Land of the Little Angel, A History of Angelina County, Texas." The plant was the first malleable iron foundry south of St. Louis, according to the book.

Citation said the Lufkin foundry closing is part of a restructuring program that will divide the company into two units —Industrial and Transportation — and accompany the elimination of 18 percent of its corporate salaried workforce. The private company is headquartered in Michigan and employs 2,600 people in Alabama, Texas, Indiana, Michigan, North Carolina and Wisconsin.

"The purpose of the reorganization is to align our manufacturing plants with the key markets they serve to drive focus and capitalize on synergies," said Doug Grimm, chief executive officer for Citation. "We continue to see growth prospects in global infrastructure such as rail, wind energy, agriculture and construction where Citation is uniquely positioned with the right mix of manufacturing assets and experienced people."

Suiter said the loss of the industrial manufacturing positions at the local Citation plant is a hard pill to swallow, given local leaders' efforts to attract more of those jobs here.

Parker said the company had not sought any assistance from the city's 4B Economic Development Corporation in the past few years, even as it has struggled through the economic downtown.

"I wasn't aware that this was imminent," he said.

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