Auburn Foundry Inc., Auburn, IN, has filed for bankrutpcy. The producer of gray and ductile iron castings claimed it had been unable to coordinate new sources of financing to continue normal operations as it reworks its production processes to a more cost-effective arrangement.
The company is reported to be preparing a reorganization plan to be filed soon, and it indicates it has temporary financing available to continue operations.
“Auburn Foundry has not been profitable for many years and our lenders have demanded the repayment of their loans,” the company stated. "We have sought replacement financing to provide long-term security for the business and relief from the liquidity pressures this situation has produced.
“Unfortunately, the collateral value of foundry assets has fallen so significantly over the past several years that replacement financing is not available," Auburn stated. It described the “liquidity pressures” as “unmanageable.”
In January, Auburn began to accelerated the down-sizing/cost-cutting effort it began last fall in response to weak demand and high operating costs. About 40% of the current work force (or more 200 employees according to local reports) are being laid off as Auburn eliminates some production processes and relocates some others from one plant to another.
In October 2003, Auburn laid off 130 workers, about 20% the total at that time. Then, too, the company cited poor revenue from gray iron castings and high raw-materials, labor, and energy costs.
Auburn produces gray iron and ductile iron castings for transportation, recreation, and appliance customers at two plants in Auburn, IN. The first plant, in downtown Auburn, began to produce ductile iron last year with some success. It will be expanding its ductile iron output, but all gray iron castings will be assigned to the second plant where the layout is more suited to the process.
Auburn filed notice in January of the layoffs under the federal Worker Adjustment and Retraining Notification (WARN) act. Total employment is reported to be about 500, and the 200 positions now targeted include both indefinite and permanent lay-offs. The changes are expected to be in effect by the end of March.
A local report quoted Auburn president and CEO David Hunter: “We regret that it is necessary to confront the possibility of layoffs of this magnitude. We feel we have an obligation to warn our people of the potential.”