GRAND RAPIDS – Dematic’s North America division may soon close its manufacturing operations in Grand Rapids and move 365 jobs south of the border to another Dematic plant in Mexico.

The company, known for decades as Rapistan, designs and builds automated systems for warehouses, distribution centers and other sites with material-moving needs. Rapistan first opened in 1939. The possible plant closing was announced Tuesday to employees.

Rob Arguelles, Dematic’s Executive Vice President Global Operations, told MITechNews.Com Editor Mike Brennan in a phone interview that no decision about the future of the Grand Rapids manufacturing operations has been made yet. The privately held Dematic’s global headquarters is in Atlanta. The company employs about 5,000 people worldwide.

“We’re a global company,” Arguelles said. “We’re continuing to leverage our footprint. We want to get the lowest costs for our customers.”

In Grand Rapids, some 900 engineers, technicians, project managers and other professionals at the North American Division would not be affected by a decision to close manufacturing operations, Arguelles pointed out.

In a notice sent to the state under the Worker Adjustment and Retraining Notification (WARN) Act, Dematic said layoffs could occur by March 11 and affect up to 365 employees.

United Auto Workers Local 1485, which represents the hourly plant workers, was notified of the possible plant closing just minutes before an announcement was made to shop employees.  Union President Scott Wahlfeldt said he received the letter from Dematic that said a final decision will be made on Feb. 8.

Wahlfeldt said he works with people whose great grandfathers worked at Rapistan. He added that the union had great relations with previous owners, but that has not been the case with Dematic’s management. He also noted the current UAW-Dematic contract expires in December, and he remains skeptical about the timing of this announcement since a threat to move the plant was made during another contract year seven years ago.

“Seven years ago Dematic said they planned to move production to Memphis if we did not take a 50 percent pay cut,” Wahlfeldt said. “Our people took 50- to 60-percent pay cuts. We helped them grow from $330 million (seven years ago) to $1.8 billion (today).”

Wahlfeldt said starting wages at Dematic’s plant is $11.55 an hour and goes up to about $19 an hour for skilled trades. In comparison, he said, Dematic pays its Mexican factory workers less than a fourth of what the company pays US counterparts.

Wahlfeldt also pointed out that Dematic was awarded $3.2 million in tax abatements from 2010 to 2015 to help it become more profitable.

“The contract ends. The state abatements end. Now they’re packing up and moving to Mexico,” Wahlfeldt said.

Those tax abatements were used to create approximately 500 high paying jobs that will not be affected if the manufacturing operation is relocated, said Dematic’s Arguelles. “The decision to be made is difficult, but purely economic,” he reiterated. “Dematic is obligated to constantly evaluate how it can better leverage efficiencies, costs and growth across its global operations and has come to the conclusion that consolidating manufacturing in Monterrey would streamline the manufacturing process, lower costs, improve efficiencies and allow it to make the necessary investments for the company’s future.

“And, with Monterrey as a hub, we believe Dematic will put more space between it and its competitors by more quickly and efficiently supplying and servicing our customers,” Arguelles added. “Dematic’s goal is to be the leading global provider of intralogistics solutions for distribution, warehouse, and manufacturing environments.”

Arguelles confirmed Dematic intends to finalize its decision by Feb. 8. He that gives the union sufficient time to provide its input. Arguelles added Dematic management hopes to work through the decision-making process cooperatively with the union. But he also said Dematic does not have to bargain over the plant-closing decision.

“The union agreed, in the labor contract, that the company could relocate at its discretion and without bargaining over the decision,” he noted. “We have offered the union the opportunity to bargain, not because we are obligated to do so, but because the union has helped Dematic achieve significant growth.”

Arguelles said the door is not yet closed on keeping these jobs in West Michigan.

“If, however, the union can show how continued manufacturing in Grand Rapids can meet or exceed the competitive advantages that can be achieved in Monterrey, we look forward to continuing our long and fruitful relationship with the union.”

For more on Dematic, click on https://www.dematic.com/en-us/services/customer-services/supply-chain-operations