End of Iron Age

0

Gregg Industries has manufactured metal parts for trucks and machines for 60 years, providing hundreds of jobs and racking up millions in sales.

But in May, the company will close its foundry in El Monte and shed 247 jobs, joining the hundreds of foundries that have closed up shop in Los Angeles and statewide since the industry began a gradual decline more than 30 years ago.

A mix of recent economic blows proved fatally toxic for Gregg.

Customers wanting cheaper parts outsourced to China and Mexico, fewer orders trickled in as the recession began and a settlement with an environmental agency over odors dinged it $4.7 million.

“We just couldn’t make it through,” said Jeff Hillier, general manager of Gregg Industries. “It’s just so sad.”

The company estimated its revenue would drop by more than half this year to $18 million while losses have grown to $600,000 a month. However, Gregg Industries’ parent company in Neenah, Wis., Neenah Enterprises Inc., has decided to keep the foundry’s adjoining machine shop open as long as possible, saving 80 jobs, Hillier said.

Neenah first announced in December that it would lay off 80 workers at Gregg, but at the time it vowed to keep the foundry open as a strategic outpost even as the company closed other foundries, including one in Illinois that employed 350.

“But profits didn’t go up and only sank, so this was the last resort,” Hillier said. “We were heading for the bottom fast.”

Indeed, the outlook for foundries is bleak.

During the peak of manufacturing in the 1950s through 1970s, California had 2,000 iron foundries, which melt iron and create rough molds called castings that machine shops precisely cut to size for uses ranging from automotive parts to gearing.

Now, there are only 35 foundries in California, including 14 in Los Angeles County, according to state data.

The majority of foundries left in the state are small to medium size, specializing in intricate, highly customized work that larger foundries in the Midwest and abroad pass on. Gregg was the big fish in L.A. County, next to smaller operations such as Covert Iron Works in Huntington Park and Alhambra Foundry Co. Inc. in Alhambra, said James Simonelli, executive director of California Metals Coalition, an industry trade group in Sacramento.

“We are losing more jobs, and facing tougher regulations that lead to higher costs for clients who end up going elsewhere,” said Simonelli, noting most state foundries now operate on average profit margins as slim as 3 percent.


One-stop shop

The losses mirror a general decline in manufacturing.

While Los Angeles County is still the nation’s largest manufacturing center with 447,000 jobs, the region lost 26,500 such jobs last year, more than any other sector.

Gregg Industries officials credit their ability to keep the foundry open for 60 years because it’s a rare one-stop shop for clients looking for machine parts. The El Monte operation not only had a foundry, but a machine shop.

“Having one company to get it all done was appealing for our clients and kept us afloat for a long time,” Hillier said.

Among its customers have been companies of all sizes, including Caterpillar, the world’s biggest manufacturer of construction equipment, and Honeywell International Inc., a diversified technology and manufacturing company.

However, Gregg recently was tripped up by tighter environmental regulations.

A study by the California Air Resources Board showed that Gregg emitted about three times as much fine particular matter as legally permitted. But since the company was established before the homes and schools around it were built, it was exempt from some of the region’s stricter regulations.

However, the South Coast Air Quality Management District started receiving hundreds of complaints from El Monte residents about foul odors coming from the foundry back in 2005. Resins used to form sand molds were likely the cause, according to the company.

After three years of litigation, Gregg agreed in a settlement in November to make $4.7 million in improvements to reduce odors. Rather than using contractors for the improvements, Ortega said company employees have been painting, residing, and enclosing portions of the building to save costs.

“We don’t blame our closing on the settlement, which we had seen then as an investment in meeting future regulation,” Ortega said. “But financially it certainly didn’t help.”

Today, the machine shop and much of the foundry’s grounds are clean, and the smell outside the factory is relatively faint. Workers still bustle about, covered in masks and helmets, pouring magma-colored liquid into molds. Men work alongside women, primarily Latinos who live nearby and converse mainly in a mix of Spanish and English.

“Most people here earn $30,000 to $50,000,” Ortega said. “These are highly skilled jobs that require careful training, and it’s a shame many of them will not be able to transfer those skills.”

Take the case of Oscar Diaz, who joined Gregg 19 years ago and has worked in both the foundry and machine shop.

Without any job prospects, he’s packing up and moving his wife and three daughters from El Monte to Oklahoma, where his brothers own a few Mexican restaurants.

“It’ll be cheaper to live there and at least I can work with my family,” said Diaz, 43. “I’ll miss this place a lot, but it’s really more worse for El Monte, which will lose a lot of money in taxes from us living and working here.”

The machine shop will stay open because it can remain profitable. Neenah plans to ship metal castings from some of its other foundries to be machined at Gregg. It’s also soliciting machine shop work from competing foundries.

“We may end up ironically machining parts that are shipped back from the places we lost our clients to,” Hillier said. “But if we can just break even and keep this place open, then we’ll just keep working.”

No posts to display