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Grede Earns $45-Million Supply Contract with Daimler AG

July 31, 2008
Foundry group plans layoffs at Wisconsin molding line

Grede Foundries Inc. has earned a $45-million order to supply heavy-truck axle castings to Daimler AG at its assembly plants in Germany. The casting will be produced at Grede’s foundries in Reedsburg, WI, New Castle, IN, and St. Cloud, MN. Milwaukee-based Grede added that it expects to announce more contracts to supply European manufacturers soon, orders that may total another $20 million.

The foundry group has engaged Huppert Engineering, Biedenkopf, Germany, as its service representative for the Daimler account. Huppert will supplement Grede’s sales office in England to pursue more export opportunities in Europe.

Grede produces ferrous castings (gray, ductile, and specialty iron, and stainless steel) at eight U.S. foundries, for automotive, heavy-truck, appliance, and industrial markets

“The opportunity to export profitably couldn’t come at a better time,” stated Grede president and CEO Bruce Jacobs. “The market is extremely difficult for the foundry industry as we try to manage volatile costs and reduced demand. The new Daimler work will help fill open capacity at our plants in Wisconsin, Indiana and Minnesota, and our hope is that additional export work fills some of the gaps at our other plants.”

The announcement of the Daimler order came nearly simultaneously with news that Grede will be laying off 90 employees from one of five molding lines at its Reedsburg foundry. According to local reports, v.p.-Operations Todd Sternaman said Grede hopes the layoffs will be temporary. About 80 workers were laid off from the plant in April.

"The majority of our customers have experienced deteriorating sales this year, which has forced them to significantly reduce their orders for our products over the last few months," Sternaman explained.

Grede also is feeling effects of rising raw materials and energy costs. Jacobs says those costs have risen approximately 40% in recent months, at the same that domestic demand for foundry products has declined by about 25%.

“It’s been a difficult time for everyone in our industry,” according to Jacobs. “While our company has been able to remain financially stable amid market swings, it hasn’t been easy and it’s involved difficult decisions to curtail some operations and employment. Europe – due in part to the favorable current exchange rates and a shortage of foundry capacity there – represents an important opportunity for Grede Foundries.”