The Timken Company (USA; NYSE: TKR) has announced layoffs across all of its bearing manufacturing plants in the southern United States, primarily affecting South Carolina. Layoffs range from 10% to 20% of each plant's workforce, approximately evenly distributed between hourly and salary positions.
South Carolina is particularly hard hit because it is home to a number of Timken manufacturing facilities -- Walhalla (a former Torrington facility), Gaffney, Honea Path, and Tyger River / Union. Production is primarily automotive-oriented at Walhalla and Gaffney, while Honea Path and Tyger River are largely industrial.
Walhalla has laid off approximately 50 out of 400 workers.
Gaffney cut 60 of its 800 hourly employees, based on seniority.
Honea Path is laying off 65 workers, or 14%, of the 465 employed there.
Tyger River / Union is laying off 62 of its 540 hourly workers.
An automotive bearing plant in Clinton, South Carolina was shuttered in 2007, putting more than 1,300 employees out of work. Clinton was another former Torrington facility; some production was moved to Walhalla and Gaffney, and the rest overseas. Employees were given the opportunity to transfer as conditions permitted.
Timken has said that the latest rounds of layoffs are in response to, "an unprecedented, global industrial recession." The company noted it tried other approaches first before resorting to layoffs: voluntary early retirement, eliminating contract and temporary workers, and scheduling shorter work weeks.
Unlike the union overhead issues facing some auto industry suppliers, all of Timken's South Carolina plants are non-union; since 1954, South Carolina is a "Right to Work" state which means employees individually decide about union membership, rather than as a group.
Other Timken facilities in the southern United States have also been hit.
Lincolnton / Iron Station recently cut another 90 workers; since last summer, the plant has laid off nearly 250 of its 950 staff.
And 55 employees were cut from the bearing plant in Cairo, Georgia; 52 hourly and 3 salaried. Cairo is now down to under 400 employees, from well over 500 just two years ago.
Ominously, Timken has strongly suggested the cutbacks so far this year are likely to be followed by more. Its core automotive and industrial markets continue to be weak, with no end in sight. Lower production volumes in these plants mean proportionately higher overhead, taking an outsized bite out of profitability. Like many other primary metals manufacturing operations, bearing manufacturing relies on high volumes and continuous, predictable sales for the most efficient and consistently profitable operating conditions. That situation is not yet in most analyst forecasts for 2009.
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