The high cost of operating the nearly 1 million-square-foot facility that employs more than 1,200 people led to the automotive supplier’s decision to phase out production in Kentwood by the end of the year and move the work to other facilities worldwide.
The Michigan Economic Development Corp. and The Right Place Program in Grand Rapids had worked for months with Robert Bosch Corp. executives to find ways to lower the plant’s operating costs. A $7.7 million incentive package the state offered Bosch to keep the plant open and bring additional work to the Kentwood facility simply didn’t provide enough relief for the company, said Jim Donaldson, vice president of business development for the MEDC.
“There wasn’t anything the workforce, the community or the state could do with a combination of factors that just didn’t work for the company,” Donaldson said. “It was an overwhelming issue of cost. We were just unable to get a handle on it enough to make the plant profitable.”
The Kentwood Bosch plant produces fuel injector components for the automotive, heavy truck and marine industries. The plant’s shutdown will affect 1,045 hourly and 221 salaried employees, said Becky MacDonald, corporate communications director for the Farmington Hills-based company.
Robert Bosch Corp. is the wholly owned North American arm of German automotive giant Robert Bosch GmhB. The business unit produces braking, ignition and engine management systems, fuel injectors, electrical motors and actuators. It employs more than 28,000 people in North America, with sales of about $6.2 billion in 2001, the most recent annual figures available.
The decision to close the plant is not reflective of the business environment in the Grand Rapids area, MacDonald said. The plant, which Bosch operated for a decade until May 2002 as a joint venture with previous owner Diesel Technology Corp., has been unprofitable for several years, she said.
Efforts to address the issue never succeeded, she said.
“There are a variety of different factors contributing to the cost issues in the facility,” MacDonald said. “I wouldn’t say it’s a regional issue or a Michigan issue.”
Negotiations will begin soon with the United Auto Workers on severance packages for the affected unionized workers, she said.
The planned plant closing couldn’t have come at a worse time for the area, which will have to absorb further job losses on top of the thousands of cuts made in the past two years by office furniture manufacturers.
“We regret the fact that this is another blow to the community there and we couldn’t do anything,” MEDC spokeswoman Susan Novakoski said.
Compounding the situation is the high-wage positions that the area will lose. One indicator on the payroll at the plan comes from the state’s proposal to Bosch, which was based on the creation of new jobs at an hourly rate of $24.04 an hour.
“That’ll be a big transition those families will have to go through,” said Ray DeWinkle, vice president of The Right Place Program.
As usual when plant closings occur, the state and local agencies will provide assistance to those losing their jobs through job training and placement, Donaldson said. MEDC and The Right Place Program staff will also work with Robert Bosch Co. to market the facility after it closes, he said.
But the mere size of the plant could hinder those efforts since few companies require that large of a facility.
“For the right user it’s a fantastic facility,” DeWinkle said. “But you don’t find the right user overnight.”
The state was limited in how far it could go in the package it offered Bosch, since tax incentives are designed to spur new investments, create new jobs and help Michigan compete with other states, and not to maintain the status quo, Donaldson said.