Cycle News Staff | November 14, 2024
Sumitomo Rubber USA, owner of Dunlop Motorcycle Tires in North America, in Western New York near Buffalo closed its doors on November 7, 2024.
Dunlop has been the spec tire supplier for flat track racing for decades.
The facility manufactured Dunlop motorcycles tires and Falken automotive tires, and is the Official Tire Supplier to the MotoAmerica Championship and the Progressive American Flat Track Championship.
The New York-based plant, located in Tonawanda near Buffalo, opened in 1923. Sumitomo took full control of it and the The Dunlop Motorcycle Tire brand in October 2015 after parent company Sumitomo Rubber Industries ended a joint venture with Ohio-based Goodyear Dunlop Tires North America. The sudden closure of one of the region’s largest manufacturing operations took elected officials and the approximate 1550 union and salaried by surprise. The Japan-based company said attempts to control costs, along with investments in the aging facility, had failed to offset mounting financial losses.
“The plant closure is primarily due to overall facility performance within the increasingly competitive international tire market,” according to a statement from Sumitomo. “This difficult decision follows a multi-year analysis of the company’s financial situation and general market conditions.”
Efforts to save the Tonawanda plant, near Buffalo, included trying to find a buyer for it, Sumitomo said in a press release, but the company said there were no offers. Erie County Executive Mark Poloncarz and Congressman Nick Langworthy said they are shocked over the sudden closure of the Sumitomo Rubber plant. Sumitomo had recently invested $140 million in the facility, including $129 million in 2022, according Poloncarz.
“It appears this decision was made by the Japanese owner’s board without any discussion with local and state officials about the possibility of closure,” Poloncarz said. “At no point did Sumitomo ask for any additional assistance to remain in operation, despite the fact we have always supported their efforts to succeed here in Erie County with tax incentives and assistance through the Erie County Industrial Development Agency.”
Langworthy said, “I’m gravely disappointed in this news. I mean, it comes as a shock… This is gonna really sting here for our regional economy.”
Sumitomo said it is contacting customers and suppliers directly to manage any concerns regarding existing orders, delivery schedules, and ongoing contractual obligations.
Here is the complete press release from Sumitomo Rubber USA:
SUMITOMO RUBBER USA ANNOUNCES PLANNED CLOSURE OF TONAWANDA TIRE MANUFACTURING FACILITY
Sumitomo Rubber USA, LLC (SRUSA) has officially announced the closure of its automotive passenger car, truck, bus, and motorcycle tire manufacturing facility located in Tonawanda, New York.
Tonawanda, NY (November 7, 2024) – Sumitomo Rubber USA, LLC (SRUSA), a Tonawanda, New York-based manufacturer of automotive tires for passenger cars, trucks, buses and motorcycles, today announced plans to close its manufacturing facility in Tonawanda, NY.
The closure follows an extended examination of the viability of the facility, following thorough analysis of various business complexities, including mounting material and logistics costs, dated infrastructure, intermittent financial performance, and changing market conditions. The evaluation was undertaken as part of a broader strategy to ensure the long-term sustainability of the Sumitomo Rubber Group in the competitive international tire market.
While the company did implement cost-control measures, efficiency enhancements, capital investments, and other improvements over the last several years, these changes have not offset mounting financial losses at the facility.
Approximately 1550 hourly (union) and salaried (non-union) employees will be impacted by the announcement and have been formally notified of the decision. The United Steelworkers Union Local 135 has also been updated and the company is working with union representatives on effects bargaining and equitable severance packages. The company intends to actively collaborate with union representation and former salaried employees on various job placement support services to help ease workforce transition.
SRUSA is in the process of communicating directly with customers and suppliers to address any potential concerns related to existing orders, delivery schedules, and ongoing contractual obligations. SRUSA also intends to conduct research, development, and testing activities at a yet to-be determined U.S. location. All tire production at the Tonawanda facility will cease, effective immediately, with related wind down activities expected to conclude over the next 12-24 months.
Sumitomo Rubber Industries, Ltd. (SRI) and Sumitomo Rubber North America, Inc. (SRNA) will continue to service existing customers, without interruption, by utilizing a larger percentage of SRI’s available global production capacity.
SRUSA remains committed to supporting its former employees through this challenging time, and remains grateful for all associates’ hard work, dedication, and contributions to the company and facility over its many years in business.
SUMITOMO RUBBER USA issued the following pdf with “Frequently Asked Questions” regarding the closing of its New York facility:
Q.) Why is the plant closing?
A.) The plant closure is primarily due to overall facility performance within the increasingly competitive international tire market. This difficult decision follows a multi-year analysis of the company’s financial situation and general market conditions. We understand that this is a challenging time for everyone involved, and we are committed to supporting our employees, customers and vendors through this transition.
Q.) What is the timeline for the plant closure?
A.) Production at the plant will cease as of November 7, 2024. The company will subsequently discuss and bargain the effects of the shutdown on the union labor force with union leadership beginning on November 13, 2024. Non-union labor and management workforce issues will be addressed separately. During this transition period, SRUSA will be working diligently to ensure a smooth and orderly shutdown, while also providing support to employees, vendors, and customers while fulfilling any outstanding obligations.
Q.) Will there be any job losses?
A.) Yes, there will be job losses at the Tonawanda facility due to the plant closure. The company anticipates the number of employees impacted will total approximately 1,200 hourly (union) associates and roughly 350+ salaried positions.
Q.) When will layoffs begin?
A.) We will discuss and bargain the effects of the shutdown on the union labor force with union leadership. Non-union labor and management workforce issues will also be addressed concurrently. The exact timing of individual layoffs will be determined based on operational needs and transition plans.
Q.) Why is there no plan to try and save the plant?
A.) Management made sincere efforts to try and save the plant. These efforts included the pursuit of various strategies and options, investments in advanced machinery and equipment, development of a turnaround plan, and other such activities over many years. Identifying a buyer for the facility was also pursued, though no offers were ever tendered.
Q.) Will plant operations be moved to another state or overseas?
A.) It is likely that SRUSA’s technical center will remain in the U.S. Existing tire production will be shifted amongst the existing Sumitomo Rubber Industries (SRI) global production footprint.
Q.) What impact will the plant closure have on the WNY economy?
A.) As a longstanding corporate citizen in Western New York, the company understands that this closure will impact the local community. SRUSA is committed to supporting our employees and exploring opportunities to mitigate the effects of the closure.
Q.) Will the plant closure have any environmental impact?
A.) No such impacts are anticipated, and the company intends to ensure the safe and environmentally responsible transition of the facility and property.
Q.) What will happen to the plant site after it closes?
A.) At this time, SRUSA’s primary focus is on a well-managed closure process. Future site activity and plans are yet to be determined.
Q.) How were employees notified of the closure?
A.) Communication with affected employees commenced Thursday morning and included a 9 am meeting with union leadership regarding the decision, while providing them with an information booklet, handouts, and website link for sharing with hourly employees. At the same time, phone correspondence was initiated to salaried workers, and hourly and salaried WARN notice letters were placed in U.S. Postal Mail for upcoming delivery and sent to appropriate government agencies via facsimile and e-mail. Various one-on-one and departmental conversations were subsequently facilitated, and an all-employee text message was sent midday. A morning media release was issued and SRUSA human resources staff have been continually responding to inbound employee inquiries. Such communications will continue given the size of the workforce.
Q.) Are workers being left without any pay following the closure announcement?
A.) All hourly and salaried employees are receiving regular pay through November 11, 2024, and then will be eligible for 60-days of required WARN compensation, paid in a lump sum format. Following effects bargaining between SRUSA and the USW Local 135L, additional severance and benefits will be communicated to all workers. Employees will also receive corresponding healthcare coverage, life insurance benefits, and career transition support services.
Q.) Is SRUSA meeting WARN Act obligations?
A.) Yes. SRUSA issued WARN notice letters to all hourly and salaried employees via U.S. Postal Mail on November 7, 2024. The official termination date for hourly employees is November 11, 2024. The official termination dates for salaried employees are either November 15, 2024, or February 15, 2025, depending on required work service as part of shutdown activities. WARN allows for two options: to either give employees 60- and 90-day notices of closure and layoff required by Federal and New York law, respectively, or to provide employees with 60-days’ pay and benefits. As a result, Sumitomo is providing all affected employees with 60-days’ pay and benefits in accordance with these WARN requirements.
Further information on the plant closure is available on the company’s closure-announcement webpage at https://srusa-tonawanda-update.com.
