Pink slips will be going to 346 people in the Cedar City area now that O'Sullivan Industries, one of the nation's largest furniture makers, has announced it will permanently close its plant by Jan. 19, 2001.
Only a few shipping employees will remain.
"It's sort of like getting hit in the stomach — it really hurts," Cedar City Mayor Harold Shirley said. "Three hundred forty-six families affected like that."
Shirley also regretted the timing of the closure: "Right before Christmas, they get the word — and with taxes due."
Shirley said O'Sullivan had been experiencing some financial problems, but within the past month, company officials had talked to him about expanding the plant and adding more workers.
The Friday closure announcement was "a bolt out of the blue," Shirley said.
As soon as he got word on Friday, Shirley said he contacted O'Sullivan officials to see if they would sell the 530,000-square-foot building located five miles west of Cedar City. "They're willing to sell it as long as it's not to a direct competitor. We're looking right now (for a new buyer to occupy the plant)."
Shirley said the area has a low unemployment rate, and two new plants and a Wal-Mart will open soon, so that should help some laid-off workers. But others may not get new jobs and may have to leave.
The plant opened five years ago amid predictions that it would create as many as 400 new jobs and greatly help the local economy. The average wages paid at the plant ranged from $9-$10 per hour.
O'Sullivan makes ready-to-assemble furniture including such things as microwave oven stands and entertainment units.
Richard Davidson, company president and CEO, issued a press release stating that "it is with deep regret" that the closing would take place.
"Downsizing is never easy. People and families are affected. We understand and sympathize with the drama that employees and their families experience during these times," he said.
Davidson pledged to help workers move to new jobs. The Utah Rapid Response Team, a group that specializes in plant closings and helps people find new work, will come to Cedar City to help O'Sullivan employees.
Employees also will receive severance packages ranging from $500 to $1,500 if they continue to work through Jan. 19.
"Limited openings" are available at O'Sullivan's South Boston, Virginia and Lamar, Mo., facilities.
Davidson blamed Federal Reserve interest rate hikes, increased gas prices and a slump in the financial markets for "early indicators that the economy was moving in a downward direction" that led to the closure. He said the final straw was disappointing sales and store closings by some of the company's largest customers.
Phillip Pacey, O'Sullivan's senior vice president and chief financial officer, said that given the sales slowdown, the company is consolidating into lower-cost manufacturing facilities.
Cedar City's plant was more expensive to operate primarily because of raw materials. "The cost of raw materials was higher, and it cost more to get them there than at our other plants," Pacey said.
The company also is laying off about 30 people at its corporate headquarters in Missouri but is not laying off workers at its other production plants. Its overall work force will be about 2,200, he said.
E-mail: lindat@desnews.com