Fuchs Systems informed 59 employees this week they will be laid off at various dates
between mid -November and the end of the year. Bob DeCusati, Fuchs’ vice president for finance and
administration, said the layoffs are spread across all parts of the company’s
Salisbury plant. He said the announcement gives those laid off a two-month notice for
finding another job. The terms of their severance include a week of severance pay for
every year of service, with a minimum of four weeks pay, provided they work out their
assignments.
They will also participate in what
is commonly known as COBRA — Consolidated Omnibus Budget Reconciliation Act of 1985
— which provides continuing medical benefits paid by the company for two months after
termination with the opportunity for the employee to buy the coverage through the company
for 18 months more. Medical benefits purchased through group plans are typically much less
expensive.
Employees who go on to a new job
before their finish date will not receive severance pay or COBRA benefits. DeCusati said
this is a fairly standard arrangement in industry.
Fuchs — the name rhymes with
nukes — makes electric arc furnaces and related equipment that manufacturers use to
produce steel. The water-cooled furnaces use tall electrode arms to produce an electric
arc hot enough to melt steel. Each furnace is designed and constructed to customer
specifications.
DeCusati said the company is
downsizing because slower steel sales for Fuchs’ customers has meant less demand for
Fuchs’ furnaces. Nor is the problem limited to Fuchs. “It’s the entire
industry,”he said.
A release prepared especially for
the company’s customers said:“Fuchs Systems, Inc. does not see in the
foreseeable future an improvement of potential projects for electric arc furnaces and
therefore had to adapt the structure of our organizations.
“We regret to announce that
we will have to reduce our staff in all areas of our business, specifically however, in
manufacturing.”
The statement said the company
will still be able to provide top quality service for its customers.
DeCusati said imports of steel
have reduced the market for American steel production. “The whole situation with
NAFTA (North American Free Trade Agreement) and very few trade restrictions make a very
tough climate for our customers,” he said. “The U.S. government had an
opportunity to increase tariffs a while ago and elected not to pursue that.”
But he doesn’t blame the
problem entirely on NAFTA, the much-debated trade agreement between America, Canada and
Mexico. Some of it is related to the cyclical nature of the steel business.
He said, “We regretfully had
to reduce our staff and our entire cost structure to gear up to the lower anticipated
volumes.”
DeCusati, who has been at Fuchs
only since March himself, said, “It was several sleepless nights for myself and the
other members of the management team.”
The layoffs did not come as a
total surprise. Several people were laid off earlier this summer and TechnoSteel, a
company based in Florence, S.C. advertised in the Post recruiting “former Fuchs
employees.”
TechnoSteel is a structural
designer and manufacturer of steel mill components. Some former Fuchs employees have gone
to work there, as well as at other steel-related companies in the United States.
Fuchs is headquartered in Germany
and has a plant in Mexico. Voest-Alpine, which owns 49 percent of Fuchs, has North
American headquarters in Pittsburgh, Pa.
Some present and past employees of
the Salisbury plant have speculated that the company’s long range plan is to send all
fabricating activity to Mexico, all other departments to Pittsburgh, and close the
Salisbury plant. DiCusati said he doesn’t expect anything like that to happen, and
that as vice president finance administration, he would be involved in such plans.
I’ve been in no discussions about moving to Pittsburgh,” he said. “The
rumor is unfounded. Nobody is going to say anything is impossible, but there’s been
no significant discussion about moving our business that I have participated in. We will
manufacture core components of electric arc furnaces and corresponding replacement part
here and we continue to look at areas where we can reduce cost.”
DiCusati said Fuchs is the market
leader, an opinion widely echoed by both employees, ex-employees and some customers.
“Our parent companies in Germany and Austria are absolutely committed to this
business.
Employees have said one of the
conditions of their severance arrangements is that they not discuss the situation
publically with the media and none has. DiCusati said the layoffs had gone “as well
as any severance can and in general our employee base received it well.”
He said the company will work with
employees and the Employment Security Commission to help them find new jobs. “We
tried to make the landing as soft as possible,” he said.
As for whether such layoffs will
continue, DiCusati said, “There are absolutely no — zero — planned future
reductions. This has been a tough step for us, something we contemplated for a long
time.”
The company is optimistic about
being positioned now as a long-term player in the industry, he said. “We believe with
the people we have here we can weather the storm,”he said. “The company has been
here for 20 years. We expect to be around for another 20 years. We are optimistic about
not having to take these steps again.” |
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