INDEPENDENCE | Three years after a plant expansion, L&M Radiator will disappear from the community.
Officials with the manufacturer, which makes heat exchange radiators for dump trucks, oil rigs and other large equipment, informed 25 full-time employees of the decision Tuesday. The operation will close at 700 17th St. SE on March 28.
The company, which is based in Hibbing, Minn., opened its Independence facility in 2005 and expanded by a third -- to 30,000 square feet -- in 2011.
Business has been shrinking of late, and president Dan Chisholm on Monday announced the closure of another location in Las Cruces, N.M. That plant will also shut down at the end of March.
“We were in a tremendous growth phase, and in November 2012 our sales started to drop off,” Chisholm said.
The slowdown is a reflection of a downturn in the oil, gas and mining sectors, which, Chisholm said, represent the company’s two largest customers. Sales peaked at $140 million in 2011 but are predicted to be about $62 million this year.
The company, which has Caterpillar and Komatsu among its larger clients, decided to ride out tough times in 2013 in the hope the situation would improve, Chisholm said.
The Independence plant had been running three shifts with a peak staff of 125 workers, but cutbacks followed as orders slowed, Chisholm said.
“We pared it down to one (shift) and had several layoffs throughout the year, but we were trying to maintain our presence there so when things turned around we’d be ready,” Chisholm said.
“When orders do pick up, we tend to get busy very fast, so we were hoping that by prolonging things that, when they did come back, we’d be in position to meet those demands; it just has not come back,” he added.
The outlook is not any better, Chisholm said.
“We made the decision that we do not need four facilities to meet those demands, so we made the decision to close.”
The closures, which wiped out about 85 full-time positions, left Yankton, S.D., and Hibbing as the company’s two surviving U.S. operations.
Nate Clayberg is the executive director of the Buchanan County Economic Development Commission.
“Over the last six months, I have seen their employment levels drop from a time a couple of years ago, when they couldn’t keep up with demand from customers and hire enough people,” Clayberg said. “I was told that their customers are sitting on a lot of inventory that has not been sold, so the demand for increased orders for new equipment has all but dried up.”
The company will offer some relocation to other plants to local employees, according to Clayberg.
The shutdown affects others in the area, too, Clayberg added, noting L&M had developed a local supply chain for its products. The closure will also touch Independence Municipal Airport since L&M used the facility regularly.
L&M will continue to lease the space it occupies, so some hope exists the company could come back in Independence, Clayberg said.
Chisholm said the company leased the building from the city, and at the end of the term has an option to buy the building for $1.
The company could reopen its Independence operation, Chisholm added.
“Hopefully, if business gets back to a level where we need that facility, it will be reopened,” he said.