KINGSPORT — One of two production lines at AGC’s Greenland plant in Hawkins County may be headed for the shelf right now. But eventually the line could be resurrected and ultimately expanded once business conditions improve.
At least that’s the hope of AGC President and Chief Executive Officer Brad Kitterman, who announced a major restructuring plan Wednesday to help turn the ailing glass manufacturer around.
Meeting with Kingsport Mayor Dennis Phillips, Kingsport Chamber CEO Miles Burdine, Kingsport Chamber President Tom Segelhorst and the Times-News early Wednesday, Kitterman said the Greenland plant was included in the restructuring plan because one of its two lines is due for costly maintenance and repairs, and the company would rather defer those expenses until business conditions improve.
“It’s unfortunate that Greenland is one of the lines we’re talking about mothballing. That was primarily driven just by a timing issue — we can’t justify making that investment,” Kitterman said.
Some 250 people — roughly half of the work force at the Greenland plant — will lose their jobs. In all nearly 1,000 employees companywide will be impacted by the restructuring plan.
Kitterman said the downturn in the housing market is the problem. AGC ended 2007 in the red, and the company had hoped to improve business toward the end of this year.
“But we’ve seen further deterioration in the marketplace — it’s down another 26 percent since December,” Kitterman said. “So we’re in a situation where we have to take some action.
“We believe this is the best path for us to take to survive the current economic conditions.”
Once restructuring is completed, AGC plans to realign its remaining businesses into three separate units. One unit will focus on solar glass, which is produced at the company’s Blue Ridge facility in Kingsport.
Kitterman said the solar business is growing due to escalating energy costs.
“And we’re actually a leader in that market in North America and worldwide. So that’s a positive situation for us,” he said.
Another AGC business unit will focus on architectural building products. Kitterman said the company will focus on value-added products.
The third unit will focus on the automotive industry, supplying windshields and other glass for vehicle production.
Kitterman said the company has been working on the restructuring plan for a number of months.
“We’ve seen what’s happened last year, and we’ve seen what’s coming this year. We don’t see any signs in the industry that there will be a recovery this year. The expectation is — next year we’ll start to see a comeback, but it will be at a slow pace,” he said.
“We really feel like we need to take some aggressive steps at this point to get ourselves back in a solid financial position,” he added.
When on solid financial ground once again, AGC will look at reviving its mothballed production line in Hawkins County. At that time — which Kitterman said could be several years down the road — the company could rebuild the line and expand its capacity. The line is now capable of producing about 185,000 tons of glass a year.
“When you close one of those (lines) down, you don’t do it for a few months. That’s going to be a year or two or three, before it comes back up,” Kitterman said.
Phillips said he’s not happy with AGC’s announcement.
“But it could have been worse. There is hope that as the glass industry recovers, the Greenland operation we hope will be rebuilt as a new furnace line,” Phillips said.
He told Kitterman that Kingsport would be willing to help the company with any expansion plans in the future. He noted the city made concessions for Willamette Industries to rebuild and expand its downtown paper mill. That mill, now called Domtar, underwent a $475 million modernization project with help from the city and state.
And Burdine noted that Eastman Chemical Co. announced a $1.3 billion project last year to upgrade its Kingsport facilities. The city and state are also helping with that project.
Another part of AGC’s restructuring may ultimately boost the company’s employment base in the region. AGC’s North American Research & Development capabilities will be consolidated into the local operations at Greenland and Abingdon, which will result in the closure of the company’s R&D facility in Petaluma, Calif. Some employees from Petaluma will be offered jobs if they transfer to the Greenland or Abingdon facilities.
Kitterman said this region — which served as the company’s corporate headquarters until those operations were moved to Alpharetta, Ga., in late 2006 — remains the “center of operations.”
“It has been our center and remains our center. The changes that we’ve made has not changed that,” Kitterman said.
He said the local operations — from Abingdon to Kingsport to Hawkins County — represent the company’s largest concentration of employees and businesses.
“And our facilities here are some of the most competitive in our network of facilities,” Kitterman said.
He said he’s committed to this region and plans to spend more time here once the restructuring effort is complete.
“I’m looking for opportunities to engage in the community here,” he said.
“We’ve been so distracted chasing volume, I hope to spend some time here in the community, engaging the people. I’ve not been very good at that up to now. So I want to spend more time here.”
Burdine, Phillips and Segelhorst said they would support AGC through its restructuring transition.
“Our sympathy goes out to those losing their jobs. A lot of them are friends of ours,” Burdine told Kitterman. “We also understand that you’re in business to make glass and sell glass. You’re in the business of making money.”