Germany-based Continental Automotive Systems announced Tuesday it would close its Culpeper plant in 2024, eliminating 225 positions.
The announcement came as part of a major global restructuring that will shed some 30,000 jobs worldwide amid a dramatic decline in vehicle production.
“The reasons for this include the persistently low global vehicle production as well as the deepening economic crisis as a result of the coronavirus pandemic,” a corporate release stated Tuesday. “The company does not expect the vehicle production to return to the pre-crisis levels of 2017 before 2025.”
The Culpeper plant has operated on Lovers Lane since 1977 and celebrated its 40th anniversary in 2017. The large, 24-hour facility produces brake system components.
Corporate officials from the Michigan office visited with Culpeper employees on Tuesday to tell them the news. Kathryn Blackwell, vice president of communications and marketing in North America, notified the Star-Exponent of the impending closure. She said major job impacts locally were not anticipated until 2022.
Blackwell acknowledged the difficult closure announcement, especially for a factory operating continuously for 43 years.
“This is a plant that has almost a generational workforce—somebody’s father worked here, here somebody’s mother worked here—so it’s a very close-knit, strong group of people we have here,” Blackwell said. “It’s not an easy time for them or the company to have to make this tough decision.”
She said employees at the Culpeper plant would have opportunities to transfer to other Continental facilities nation and worldwide. Longtime employees nearing retirement will receive their pensions and other employees will be given severance packages based on their position and tenure.
In addition, those employees who agree to stay on until the end will receive an additional retention bonus, Blackwell said. For the average production worker, that retention bonus would total $14,000 with half paid out in December 2021 and the other half in December of 2022, she said.
The Culpeper factory is the only facility of more than half-dozen in the U.S. closing as part of Tuesday’s announcement, according to Blackwell. She said production of the brake components made here would shift to a facility in Mexico.
“One of the rationales,” for closing the Culpeper plant, Blackwell said, “is the brake system Culpeper produces at one point was very leading edge and very much a sought-after technology that has now become more of a commodity. Pricing of that system is undergoing a significant amount of pressure at this point. It is not only impacting this type of product, but other products that Continental produces due the changing industry we are seeing.”
COVID-19 has escalated the vehicle production slowdown, she said. The Culpeper plant is currently producing, however, and will do until 2024. Blackwell added the local facility is in “catch-up mode” after being closed for two weeks due to the pandemic.
The corporate announcement Tuesday said the company’s goal is to achieve gross annual savings of more than one billion Euros ($1.19 billion) starting in 2023 and beyond.
“The entire automotive industry is currently faced with enormous challenges,” said Continental CEO Dr. Elmar Degenhart in a statement. “It has not experienced a larger, more severe crisis in the past 70 years. “This crisis is hitting suppliers particularly hard. It will demand a lot from us in the short term and push our limits in the coming years.”
Part of the company restructuring “will likely lead to the relocation or closure of facilities and operations where costs are too high, where technologies are becoming obsolete or where production capabilities cannot be utilized profitably in the medium and long term,” the corporate release stated. It did not mention Culpeper.
Continental employs more than 232,000 around the world. Of the 30,000 total jobs excepted to be cut, about 13,000 are located in Germany, according to the release.
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