Parker Hannifin is closing its Deerwood plant and moving those jobs to Wisconsin.
Work to shutter the Parker Hose Products Division facility in Deerwood is beginning immediately with the plan to complete the closing by the end of the year. Thirty-one full-time jobs are affected with the closing.
The work will be moving to the Parker Hannifin facility in Manitowoc, Wis. Employees heard the news April 6.
"It did catch me by surprise," Deerwood Mayor Mike Aulie said of the news of the plant's closing. He said he hadn't heard anything until employees were told although he could see they were running fewer shifts than in the past.
Aulie said the Parker Hannifin plant is not only one of the largest employers in Deerwood but also in the Cuyuna Range, looking at employers outside of the school district or the medical center.
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Parker and Magnum Machining in Deerwood are both major employers in the city.
"And to lose one of them, it's just sad," Aulie said. "You just hate to see that happen."
Aulie said the Parker manufacturing site on Front Street in Deerwood has been a going concern of one kind or another since he was a boy.
Aulie said he'll reach out to the Brainerd Lakes Area Economic Development Corporation, and the city stands ready to help the displaced workers and in attracting new employers in any way it can. For new businesses looking for a potential location, Aulie said the city has options of low-interest loans to assist them.
Pressures behind the decision
"We have excess capacity in the division for manufacturing so since there is capacity at the Manitowoc facility, we decided to close this smaller facility in Deerwood," said Aidan Gormley, Parker Hannifin director of corporate communications. "The demand for the products just can't support that much manufacturing capacity at this point so consolidating allows us to maintain our competitiveness and reduce costs overall for the division."
Workers in Deerwood produce hoses for a variety of industries, including oil and gas, construction and mining.
"So you can imagine a lot of those markets have been affected by demand this past year," Gormley said.
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He said the oil and gas industry is one of the more significant markets for the products and that is under pressure. The company is not predicting a comeback or return in demand from that marketplace for some time. "It's a challenge for us," Gormley said.
The Industrial Commission of North Dakota, Oil and Gas Division, noted an average rig count of 40 in February, down from 52 in January of this year and down from more than 200 rigs in 2012.
"We'll do everything we can to make this transition as easy as possible," Gormley said. "We would typically offer severance pay. Wherever we can, people will be offered opportunities in the other location and we offer outplacement support as well. So we do whatever we can to support the employees that are affected."
Parker Hannifin had 55,000 employees globally as of the end of last year and has operations in 50 countries around the world. Parker Hannifin Corporation was founded in 1918 and has annual sales of about $13 billion, according to the company's website on its history. The company is headquartered in Cleveland.
Gormley said it hasn't been determined what will happen to the Deerwood manufacturing facility.
Parker Hannifin, Aulie said, has been an extremely good corporate citizen, supporting fundraising efforts such as playground equipment among others and was there anytime the city asked for assistance.
Aulie said Parker is among the industries affected by the changing fortunes of the Bakken Oil Fields. "The boom seems to be over for now."
RENEE RICHARDSON, associate editor, may be reached at 218-855-5852 or renee.richardson@brainerddispatch.com . Follow on Twitter at www.twitter.com/Dispatchbizbuzz .
