Leon Plastics, a company that's been making plastic parts for automobiles since the days before seat belts were required by law, has announced the closure of a plant in a small Nebraska town called Alda where 140 people used to be gainfully employed.
The closure of a plant is already bad enough, but in this small town (in 2000 there were 652 people there) it is an economic cataclysm. According to Leon, the plant will be fully closed by May 2009, with most of its operations being relocated to Grand Rapids, Michigan.
The rationale? Moving the plant closer to Detroit will reduce costs and increase profits through proximity to the customer. Not mentioned in this rationale is the fact that 5% of the plant's output will be redirected to Satilo, Mexico.
Leon cited increasing distribution and shipping costs as the driving force behind the closure, but in my opinion, it is more closely related to the mismanagement and resultant fiscal cancer that is slowly killing American auto manufacturers.
In typical American fashion, automakers such as GM and Ford tooled many of their factories to make large, expensive, gas-hogging vehicles intended for clownsumers with a HELOC or two.
Now that the credit is all dried up, so are auto sales. And, as it turns out, autos are made of auto parts. Too bad the folks in Alda are the ones taking the shaft on this one.
Leon Plastics, Inc. is headquartered in Grand Rapids, Michigan.
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