Grede to Close Foundries in Michigan, Kansas

Aug. 20, 2009
Group realigning capacity during bankruptcy reorganization
Grede Foundries Inc. will close two of its plants in the next four to six months, according to a statement by the group’s chairman. A gray iron foundry in Vassar, MI and a ductile iron operation in Wichita, KS, will be close “in order to realign capacity and better position the company for profitability in a post recession worldwide economy,” according to a statement by chairman Richard Koenings. The Milwaukee-based foundry group filed for Chapter 11 bankruptcy, and at that time it was reported that none of the seven foundries in the group would be closed. Grede was understood to be seeking a buyer, and had accepted interim financing from Wayzata Investment Partners L.L.C., a Wayzata, MN, private equity group. The investors reportedly agreed to be the first bidder on the sale of the plants. Earlier this year, Grede announced it would close its Greenwood, SC, foundry, and hinted it might sell the Vassar plant. The group currently operates foundries in New Castle, IN; Iron Mountain, MI; St. Cloud, MN; and Milwaukee and Reedsburg, WI, in addition to the Vassar and Wichita plants. The plants in New Castle, Iron Mountain, St. Cloud, Milwaukee, and Reedsburg are not impacted by the closings, Koenings stated. The Vassar Foundry produces shell mold gray iron castings at a capacity of about 40,000 tons/year. Its primary markets are listed as automotive OEMs and after markets, the refrigeration industry (compressors and appliance), and the hydraulic industry. Most of Vassar’s product lines will be discontinued, according to the chairman. The Wichita Foundry supplies ductile iron castings for manufacturers of hydraulic systems, internal combustion engines, transmission components, heavy equipment, and other applications. Wichita’s products will be assumed by Grede’s other operations. In his statement Koenings said the shutdowns are a “step” in Grede’s bankruptcy reorganization process. He emphasized that until the plants are closed the company will provide full service and meet all customer needs, there and at its other plants. “This move will allow the company to realign production capacity to reflect the down market, particularly in the automotive industry,” he stated. “These decisions are never easy and always difficult, particularly because we do and have always cared a great deal about our people. Nevertheless, in order to restructure and return to profitability, it is necessary to reduce our capacity to reflect the new business environment in a worldwide economy and utilize our resources in the best way possible.”