Brunswick Corporation announced it will begin moving its bowling ball production from Muskegon, Mich., to Reynosa, Mexico, over the next 12 to 24 months. The company cited its inability to be competitive in the global marketplace, despite numerous cost-cutting efforts at the Muskegon plant, as the reason behind the decision.
During the next two years, approximately 115 production positions will be phased out at Muskegon as the company migrates production to the yet to be completed new plant. Brunswick Bowling's sales and support functions, which comprise the majority of the Muskegon operations with approximately 275 positions, will remain in Michigan.
The decision was announced following a recent round of meetings with the union representing employees in the ball plant production and distribution areas.
“Brunswick's commitment to Muskegon remains strong, despite this latest and most difficult decision,” said George W. Buckley, chairman and chief executive officer for Brunswick. “As Brunswick continues to sell, source and manufacture products around the world, Muskegon will remain an integral part of our bowling operations. It will remain home for our bowling products operation's key functions such as sales, marketing, research and development, distribution and supply chain management, ensuring that Brunswick maintains its competitive edge and leadership position in an increasingly competitive global market.”
“For some time now, we have had a sustained and concerted effort to reduce costs at Muskegon, our only ball production facility, and throughout our bowling products group,” Buckley said. “While these efforts have produced savings, the current cost structure in our bowling ball production operations remains too high, and there appears to be insufficient opportunity to gain significant new cost savings in material purchases or productivity improvements alone. We need to fundamentally alter our cost structure if the bowling ball business is to remain viable.”
“After discussions with union representatives, we have found that little more can be done to mitigate the relatively high labor costs of the current manufacturing operation, when compared with an operation in Mexico,” Buckley continued. “Our ball production costs in Muskegon are higher than what our competitors pay, and the cost difference between the current and future sites of ball production is substantial.”
“This was still a very difficult decision to make, particularly in light of the fact that we have had production at this facility for many decades,” explained Buckley. “We did so, however, after exhausting every avenue and concluding that there were no other truly viable options to sufficiently reduce manufacturing costs and restore our cost competitiveness.”
“We decided to make the announcement now, to give our employees the earliest possible notice of our decision as well as ample time to prepare for their transition to other employment,” Buckley explained. “We will be discussing the transitional assistance package with union leadership as soon as possible.”
During the transition, certain manufacturing equipment will be moved to the Reynosa facility, while the Muskegon operation turns its focus to sales, support and product development.
Brunswick said that estimated transition costs of approximately $7 million will be incurred over the next two years and will not materially affect its overall financial performance for 2005. The move will save the company between $5 million and $6 million annually once the transition is complete in 2007.
