CTA Acoustics Inc. is moving ahead with plans for a new facility in Corbin, Ky., to replace the one destroyed in an explosion that killed seven people. The company also faces state fines related to the fire and expects lawsuits from survivors.
In addition, one major customer is preparing to move its business, while a second has decreased orders because of a slowdown in its own sales.
``We have established a strong midterm and long-term position for future business, but we are going to be squeezed in the near term until some of that new business goes into production,'' said CTA Chairman James Pike in a Sept. 3 news release.
Seven employees died and another 30 were injured in the Feb. 21 explosion that racked the Corbin plant, sparked near a production line where workers blended chemicals for the firm's fiberglass insulation products.
The company has relaunched production in temporary quarters and is in the midst of building a 350,000-square-foot facility in the town. Madison Heights, Mich.-based CTA will buy 11 new presses and seven water-jet systems to add to the 25 presses and water-jet systems refurbished from the old plant.
``Despite challenging business conditions and our tragedy earlier this year, there is no change of direction in CTA's plan,'' Pike said.
The Kentucky Labor Cabinet has filed two citations against CTA, alleging a ``serious'' violation for both health and safety concerns. The citations carry a combined $49,000 worth of fines - $7,000 for each of seven subsections noted by the state. Serious is a step below the state's highest violation level, ranked as ``willful.''
The state documents note concerns with power taps and flexible power cords used improperly, along with notes of problem wiring, equipment or installations ``not intrinsically safe or approved for the hazardous location.''
It also maintains that the plant ventilation system was not working adequately, allowing for an accumulation of dust in work areas. An inspector stated that in one spot, more than 4 inches of dust had built up.
In addition, oven doors were left open in the production area and a fire door designed to close in an emergency was blocked open.
The firm has disputed the claims and appealed the citations. A hearing will take place within one to three months, said Labor Cabinet spokesman Eddie Jacobs.
Some of the injured workers and the families of those killed also have filed at least one lawsuit in the case with the Laurel County Circuit Court, and more are expected.
The suit, filed Aug. 29, also takes aim at Borden Chemical Inc. of Columbus, Ohio. No court action has been scheduled yet. Executives with Borden were not immediately available to discuss the suit.
CTA also is battling the loss of business within existing customer ranks.
Building products group CertainTeed Corp. told CTA it plans to produce its own insulation in-house in the future, which means the new plant will be operating at ``less than full capacity'' when it opens, Pike said.
Major automotive customer Ford Motor Co. also has reduced its purchases from CTA as it scales back production because of the tough auto marketplace.
``We are very confident that we will replace that loss with new business from major automobile manufacturers and key Tier 1 suppliers, but there is a time lag in that type of business,'' Pike said.
The company has offered buyouts to some of its employees in a move to reduce staffing levels at the plant.
``I wish that circumstances were different, but the current business levels won't support all of our people,'' he said.