ContiTech has been saddled with excess conveyor belt capacity throughout the North American region and across the globe for some time, the company said.
After reviewing its manufacturing footprint and production capabilities, the firm said it decided to close the Bowmanville factory because a recovery of the mining industry market is not expected anytime soon, according to forecasters.
Worldwide, the mining industry has been in a slump for many months primarily because of decreasing demand for products and depressed prices for commodities, according to Hannes Friederichsen, head of the Conveyor Belt Group business unit.
“This is one of the reasons that many mining companies are not investing as much as they did five or 10 years ago,” he said. “In addition, there are political and economic uncertainties in regions that are important markets in the mining world.”
In 2015, he said, 71 major mines around the globe have been forced to close, with 17 of them shutting down operations between July and September alone.
ContiTech plans to relocate production of heavyweight conveyor belts, both steel and fabric reinforced; custom mixing; and rubber-based adhesives from the Bowmanville plant to other underutilized sites within the company over the next several months, the spokeswoman said. A decision has not been made on the locations, she said.
Some equipment may be relocated to other facilities, she said, adding that the fate of the plant has not been determined.
ContiTech purchased the factory in January 2015 as part of the acquisition of Veyance Technologies Inc. However, since that time the mining industry has gone downhill, creating the excess belt capacity situation.
“These decisions aren't taken lightly and are very difficult to make, but unfortunately some restructuring is necessary given the current situation,” Friederichsen said.
Because ContiTech is faced with excess conveyor belt capacity globally, the spokeswoman said, it continues to look at all areas to improve the firm's performance as part of its international strategy. Its aim is to align its capacity with forecasted demand.