Luxembourg-based SAF-Holland S.A. has announced that an anticipated decline in the North American truck market will cause it to reduce production capacity by closing two plants in Michigan and consolidating its component manufacturing in five remaining factories.
The change will also move production closer to its truck and trailer customer base, the company announced from its European headquarters.
“This decision will align the organizational structure with the changes in the market situation and secure the long-term competitiveness of the North American plant network,” the announcement said. “The internal logistic processes will also be optimized to improve delivery times.”
Central to the plans is the closing of the plants in Muskegon and Holland, Mich., and transitioning to locations in Dumas, Ark., Cincinnati, Ohio, and Wylie, Tex., SAF-Holland said. It will invest about $3 million at those facilities.
The company did not mention how many workers will be affected by the closings, or by possible production increases at the remaining plants. Production of individual product groups, which until now was dispersed over various locations, will each be centralized at one location.
“The remaining locations are closer geographically to the major truck and trailer customers so that lead time responsiveness can be improved and customer requests for locations with shorter delivery times can be met,” the statement said. Testing centers and administrative offices of the Muskegon and Holland locations will be centralized at the facility in Muskegon.
“This will enable us to build a new state-of-the-art engineering and technology center at the Muskegon location,” the company said. “In addition, the headquarters and corporate functions of the Americas region will be centralized in Muskegon.”
The transition, which is expected to be implemented over 18 months, will lead to one-time restructuring costs of as much as $10 million this year. That will consist mainly of moving costs, impairment on machines and equipment, and severance payments.
“The consolidation of production capacity in North America allows for far-reaching improvements through better customer proximity and thereby leaner logistics operations, centralized production processes and productivity increases,” the statement said.