Continental AG's ContiTech business is planning a major investment at one of its U.S. hose plants, but the project will result in the closure of a second factory.
ContiTech is spending about $12 million to expand its Mount Pleasant, Iowa, plant to manufacture PVC hose there, creating a North American PVC Center of Excellence, said Andreas Gerstenberger, global head of the Fairlawn, Ohio-based Industrial Fluid Solutions business unit of ContiTech.
The investment 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.
Gerstenberger said the first phase of the project will bring 40 new jobs, with production slated to start at the beginning of 2018.
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.
But while the facility in Mount Pleasant will get a further upgrade, ContiTech said it will end production of PVC hose at its Hannibal, Mo., factory by the end of 2017. That plant employs 52, and Gerstenberger said because the facility is just about 100 miles from Mount Pleasant that the workers are being offered the chance to apply for the new positions in Iowa.
Employees were informed of the decision last week, 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.
Gerstenberger said the decision to move the PVC production to Mount Pleasant is part of its "Smart Solutions Beyond Rubber" strategy launched in the middle of last year.
"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."
The main applications for the PVC hose will be industrial, with a higher percentage aimed at construction, general purpose industry, and maintenance and repair operations, he added.