Demag Plastics Group will stop producing injection molding machines in Strongsville, Ohio, this summer. The decision ends more than 60 years of press making in the Cleveland area by the company and its predecessor, Van Dorn Plastic Machinery Co.
DPG will shift production of the large Titan injection presses that are built in Strongsville to its plant in Ningbo, China.
Workers at the Strongsville plant were called to a meeting June 28. They learned, via a video conference, DPG will end its U.S. manufacturing operation Aug. 28. DPG will eliminate 102 manufacturing jobs, in two rounds of layoffs, Aug. 28 and Sept. 28, according to a notice the company filed with the government.
Klaus Erkes, DPG's president and chief executive officer, said the company will continue to use the plant for sales, service and technical support. ``We will keep all the people for after-sales and service, and all the people in sales. And so the owners of Van Dorn and our machines can be guaranteed that all these people in sales and service will be around,'' he said.
Eugene Magocky, Strongsville's economic development director, said DPG still will employ about 75 people there.
Madison Capital Partners, a Chicago investment firm, purchased Mannesmann Plastics Machinery GmbH a year ago - including Demag Plastics Group and several other plastics machinery makers. Magocky said Madison Capital also recently purchased the 240,000-square-foot Strongsville building.
Larry Gies, Madison Capital's president and CEO, did not return a telephone call seeking comment. Brian Bishop, president of DPG's North American operation in Strongsville, also could not be reached.
DPG, based in Schwaig, Germany, also has plants in Schwaig and Wiehe, Germany, one in Ningbo, China, and two plants in Chennai, India, under a joint venture with an Indian partner. Those other operations are not affected by the news.
In October, DPG announced it was limiting production in Strongsville to just large-tonnage injection presses, the Titan brand. At that time, DPG phased out U.S. manufacturing of the all-electric IntElect presses, and the HT line of toggle-clamp machines. The HT has an installed base of 8,000 presses in North America.
``Manufacturing hydraulic machines in Cleveland is no longer necessary,'' Erkes said.
Company officials feel DPG still has a strong position in the U.S. market, Erkes said. But he cited the ``tremendous change in demand'' for injection presses in the U.S. market, which today is about half the size it was in the late 1990s. Also, all-electric presses now account for about half the total U.S. market, and DPG already has announced plans to import IntElect machines to the United States from China.
Magocky said the plant employed about 700 people in the mid-1990s. But in recent years, DPG has cut jobs in Strongsville, in a slow process that let go 10 or 15 people here and there, he said. The plant is nonunion.
Large-tonnage injection molding machines, like those built in Strongsville, have been one of the bright spots of the U.S. injection press market. But sales have been hurt by production cuts by U.S. automakers, which ripple down through plastic parts suppliers.
DPG and other machinery makers have been hurt by auctions, caused by bankruptcies and restructurings, which have dumped presses into the U.S. market.
High resin prices also have hit the bottom line of molders, causing some to delay purchasing new equipment, industry officials say.
``In America, there is a market question and a product question, so we have to change ourselves,'' Erkes said. ``We want to reposition and focus ourselves.''
The original company, Van Dorn Plastic Machinery Co., has deep roots in Cleveland. Van Dorn Co. was born in 1872 as an iron works, then diversified into metal can production. The company began making hand-operated Midget Molder injection presses in 1945.
Van Dorn introduced its first hydraulic press in 1967. In the 1980s, it opened two machining plants in South Carolina. The HT was introduced in 1988.
Van Dorn opened the Strongsville factory in 1970. The company closed its original machinery plant in Cleveland in 1990.
Now DPG is part of the world's largest plastics machinery business. Munich, Germany-based MPM also owns firms that make the brands of Krauss-Maffei, Netstal, and Berstorff. MPM has annual sales of about $1.5 billion.
Madison Capital bought MPM a year ago from New York-based Kohlberg Kravis Roberts & Co.
Demag Plastics Group made several moves - pre-Madison Capital - that indicated the company would remain in Ohio. In 2004, the company sought tax breaks for plant improvements in Strongsville, rather than moving to South Carolina. DPG also spent $2 million to build a second-floor training area and conference rooms above the main entrance in Strongsville, plus add a machine demonstration area the assembly floor.
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Chennai, India (two sites)
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In Strongsville, Ohio, DPG will eliminate 102 manufacturing jobs, in two rounds of layoffs, Aug. 28 and Sept. 28.