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NN lays off 30 workers in Erwin

JIM WOZNIAK • Dec 10, 2008 at 12:00 AM

ERWIN — NN Ball and Roller has laid off 30 employees at its Erwin plant for what the company hopes will be a short time as a result of what one official described as reduction in inventory by its customers.

Last week’s decision came a month after NN, which manufactures precision bearing components, industrial plastic and rubber products and precision metal components, laid off 15 employees at its Mountain City plant. Frank Gentry, who oversees plants in Erwin, Mountain City and China, said all facilities in the company’s system have been hit with layoffs.

“It’s absolutely horrible timing,” he said. “We’re very concerned about the time of the year the layoffs hit, but for the health of the company, you have to do everything you can do to conserve your cash flow. It should help in getting our people back as soon as we can is what we want to be able to do.”

Gentry said all of the company’s plants have been hit with decreases in demand (NN announced late last month it was closing a plant in Ireland). He said slower demand at the Erwin plant — which, unlike the automotive-based Mountain City plant, is more industrial based — probably is related to customers focusing on cash flow and reducing inventory.

“I think on the Erwin plant that we might see schedules get a little bit stronger because most people on the industrial side are forecasting 2009 to be down about 5-10 percent compared to automotive at 30 and 35 percent,” he said.

The layoffs come near the end of what had been a terrific year for NN, which enjoyed record profits through the third quarter but warned early last month that the global economic crisis meant rough sailing ahead.

Because the corporation made a record $17 million in the first three quarters, those who have been laid off will be paid a bonus. That is more of a profit than the company had ever made in four quarters, Gentry said.

The Erwin plant employs 200 people, and the Mountain City plant has 90 employees.

The Erwin facility primarily makes precision steel balls and cylindrical rollers, and the layoffs occurred in the ball area. Gentry said NN hopes to get the employees back as soon as possible but said that depends on the economy. The layoffs were based on seniority and skill set.

“We’re considering it here at this location (Erwin) short term because since it is industrial based, we’re hoping that once these inventory levels get down to the levels that they want, then we’ll see some stronger schedules,” he said. He said the company believes the layoffs will be temporary in Mountain City as well.

More layoffs are not foreseen in Erwin or Mountain City, but that hinges on the economy, Gentry said.

NN’s CEO, Rock Baty, confirmed that the company’s recent decisions — which also have included steps to eliminate discretionary spending and suspend its regular quarterly dividend — all are adjustments to “significantly reduced volumes.”

The news in Erwin comes as NN is undertaking a $6 million, 6,000-square-foot expansion at that plant that eventually will lead to 17 jobs in a transfer of tapered roller business from NN’s plan in the Netherlands to sell to customers in North and South America.

That contract was signed in the first quarter, when business was going better, Gentry said. That cannot be stopped all of the sudden now that the economy has gone sour, he said.

Gentry said many NN customers are not putting together business plans because of economic uncertainty. He said NN completed its business plan in October, gave it to board members in November and already believes it does not match how 2009 will turn out.

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