FAIRLAWN, Ohio—Continental A.G.'s ContiTech business is following through on a plan it launched last year to seek "Smart Solutions Beyond Rubber" that will bring a major investment at one of its U.S. hose plants, but result in closure of a second site.
ContiTech is spending about $12 million to expand its Mount Pleasant, Iowa, plant to manufacture polyvinyl chloride hose there, creating a North American PVC Center of Excellence, said Andreas Gerstenberger, global head of the Fairlawn-based Industrial Fluid Solutions business unit of ContiTech.
But while ContiTech brought good news to Mount Pleasant, the firm concurrently announced plans to shut down its Hannibal, Mo., factory, where it currently produces PVC hose.
The investment in Iowa will add 36,000 square feet to the Mount Pleasant footprint, bringing the size of the facility to more than 200,000 square feet, and expand its North American PVC hose capacity by more than 20 percent. He said the Mount Pleasant factory is the largest among the 25 IFC plants worldwide.
Gerstenberger said the first phase of the project will bring 40 new jobs, with production slated to start at the beginning of 2018. Further job creation will depend on the IFS business unit achieving growth in the PVC hose market.
Current employment in Mount Pleasant is a little more than 200. Published reports said the Iowa Economic Development Authority chipped in $325,000 in loans and $500,000 in tax credits and refunds toward the expansion, contingent on ContiTech adding 41 jobs.
The project follows an $8 million expansion that added 30,000 square feet to Mount Pleasant last year and included a new rubber hose line, which just came on line in April, according to Guy Enta, a vice president and head of the Americas for the IFS business unit.
Employees at the Hannibal plant, though, will see production end there by the end of 2017. That factory employs 52, and Gerstenberger said because the facility is just about 100 miles from Mount Pleasant workers are being offered the chance to apply for the new positions in Iowa.
Employees were informed of the decision in mid-May, and he said some already have contacted the company about the new positions.
"Continental will actively support those interested in applying for a transfer to Mount Pleasant or will provide a severance package, if employees stay on until the end of production," ContiTech said in a statement.
Concentrated focus on PVC
Gerstenberger said the Hannibal facility is "relatively small," and the firm determined its future prospects in the PVC hose market would be better-suited by constructing a new area at Mount Pleasant. The official acknowledged that historically ContiTech has not been as strong in PVC hose as it needs to be.
"The expansion in Mount Pleasant allows us to drive synergies and combine technologies in both PVC and rubber hose operations under one roof," he said. "It culminates a comprehensive and strategic plan to increase our long-length and PVC hose capacity in North America by more than 20 percent. The leap in production technology gives us the bandwidth, capacity and ongoing support to better serve our customers' needs."
Enta added that while the expansion is on the Mount Pleasant site, "this is really a plant within the plant, so to speak. The plant there now is a rubber plant. This is PVC. It's different technologies, a different material."
There will be one management team overseeing the Mount Pleasant site, but he said the rubber and PVC side each will have an operations manager, its own research and development staff, and separate product management and marketing personnel.
Gerstenberger said most of the 40 new jobs will be in production, but there will be some specialists tied to the PVC Center of Excellence.
The main applications for the PVC hose will be industrial—the rubber side does make some automotive hose—with a higher percentage aimed at construction, general purpose industry, and maintenance and repair operations, Enta added. "It will cross all industries, but with an emphasis on the construction and non-oil and gas industries."