Custom injection molder Imperial Plastics Inc. is shutting down a plant it opened only two years ago.
The company said it will close its Mankato, Minn., facility in the first quarter of 2017, mainly because of lost contracts from one of its major customers who moved production outside the United States to an unspecified nation that offered lower labor and assembly costs, Imperial noted in a Nov. 30 announcement.
Imperial opened the greenfield Mankato plant in 2014 during an ambitious expansion phase. Besides starting up the Mankato facility, Imperial acquired another Minnesota molder, Engineered Polymers Corp. in Mora in 2014.
The Mora plant will take on some work resulting from the Mankato closure, with Imperial moving the rest to its two Lakeville, Minn., plants and distribution center.
The Mankato closure affects 86 employees, who have been offered jobs in Mora and Lakeville, where Imperial is headquartered. Employees who take up the offer can get a bonus to reward their loyalty. Employees who don't apply for relocated positions will be eligible for severance, out-placement and retraining services, as well as continuing benefits.
“This was a very difficult decision for us to make,” noted Imperial President and CEO Andy Eckert in the announcement. “Our priority right now is for the well-being of our Mankato team and taking care of them alongside of assuring a smooth transition for our customers.”
Imperial's expansions boosted its sales to about $112 million in 2015, according to Plastics News data, putting the company at No. 72 in the annual ranking of North American injection molders. Its 800 employees had been running about 150 injection presses at its four molding shops.
Loss of the Mankato business will cut those figures by about 10 percent, Eckert said.
Imperial broke ground on the Mankato facility in August 2013. Its original plan revealed in 2012 was for a 69,000-square-foot facility but it hiked the planned square footage to more than 124,000 square feet when it started construction.
The company qualified for up to $722,000 in tax-increment financing and a $300,000 low-interest loan for the Mankato project. A Mankato economic development official deferred questions to Imperial.
Eckert said in a local TV report that cost was the driving factor for the undisclosed customer to pull its business from Mankato. Mankato's costs for manufacturing and assembly no longer fit the client's business model compared to low-cost regions.
Eckert joined Imperial in November 2015. Former president and owner Norman Oberto headed Imperial during its expansion phase. In 2012 Minneapolis private equity Goldner Hawn Johnson & Morrison Inc. invested in an equity position in Imperial. Eckert said there has been no ownership change in the company, his coming on board was part of a planned succession. Oberto retains an ownership stake.
Imperial is a diverse thermoplastics molder with insert, gas-assisted and structural foam molding technologies.