Released on Feb. 7, 2008

Nemak of Canada announced on Feb. 6 it intends to close its Essex Aluminum Plant, Windsor, Ontario, Canada, sometime in the first quarter of 2009 due to global pressures.

According to a company spokesperson, the decision to close the plant, which produces aluminum cylinder heads for Ford Motor Co., is the result of price demands placed on it by original equipment manufacturers, the rising value of the Canadian dollar, and increased pressures from global competition. The exact closure date is unknown at this time.

“Just a few short years ago, [the Canadian dollar was weaker than the U.S. dollar] and it was a real benefit to do business in Canada,” said Robert Smillie, a senior advisor to Nemak. “We no longer have that advantage.”

The Essex plant was built in 1981 by Ford but became a joint venture when Nemak purchased a controlling interest in 2000. Today, Ford owns less than 7% of the venture, according to Smillie. The plant manufactures only cylinder heads, and Nemak plans to work with Ford to assess each job currently in production on a case by case basis before determining which plants will pick up the work.

Four hundred ninety hourly employees, represented for Ford by the Canadian Auto Workers (CAW) Union Local 200, and 106 salaried employees will be released as a result of the closing. The salaried workers are non-union.

“This is a crushing blow to Ford/Nemak workers and the Windsor area, which has one of the highest unemployment rates of any large city across the country,” said CAW President Buzz Hargrove.

Smillie said the salaried Nemak employees will have the opportunity to find employment with other manufacturing plants within the organization. The nearby Windsor plant, which produces cast aluminum engine cylinder blocks, will remain open.

In a statement released by CAW, the union said the closure was evidence that the Candian government needs to address unbalanced international trade, specifically with Asia and Europe.

“[Prime Minister Stephen] Harper’s government must move quickly to develop a long-term automotive policy that will both stop the job loss and rebuild Canada’s most important industry,” Hargrove said.

The downsizing comes on the heels of several significant expansions for Nemak in 2007. The company purchased the majority of the casting properties of Teksid Aluminum, Detroit, and the European operations of Hydro Aluminum, Oslo, Norway, last March, making it the world’s largest producer of metal castings for automotive engines. It then purchased Castech, Saltillo, Mexico, a nearby competitor, in May 2007.

“This is not a chink in the armor,” Smillie said. “Actually, it will be a consolidation of excess capacity that we have.”