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The Clarios assembly plant in Middletown, seen here in 2016, will close in November, according to the company. PHOTO COURTESY OF ERIC CROSSAN[/caption]
MIDDLETOWN – Clarios, the world’s largest supplier of automotive batteries, will close its assembly plant off Broad Street this fall, the company confirmed Tuesday.
The company was known as Johnson Controls until May 2019, when it was acquired by Canadian investment firm Brookfield Business Partners in a $13 billion deal.
Clarios will continue to operate a distribution center in Middletown located off Patriot Drive near the Amazon Fulfillment Center, the company reported, noting it was “vital to serving our customers across the Northeast.”
“As part of our ongoing focus is on providing best-in-class service to customers, while optimizing and modernizing our operations, we will be streamlining our U.S. manufacturing network through the closure of our Middletown assembly plant in November 2020,” the company said in a statement. “The decision to permanently close a plant is not one we made lightly, but we are confident that it is necessary to strengthen our position as a global leader in advanced battery technologies.”
A notice filed with the state said 229 employees would be affected by the closure in Middletown, and a Clarios spokeswoman said that the company was not planning on closing any other of its more than 50 sites. The employees are represented by Middletown-based United Auto Workers (UAW) Local 1516. The union was not immediately available to comment.
The company’s statement said it will offer opportunities to move to the Middletown distribution center or other facilities, adding that “in limited cases where opportunities are not available, we will compensate fairly.”
Middletown Mayor Ken Branner said that Clarios notified the town of its decision but didn’t offer any additional insight as to its reasoning. He noted that the company said it was working with the state Department of Labor, the UAW, the governor’s office, and Delaware’s Congressional delegation in its plans to close the facility.
Although Clarios did not blame the coronavirus pandemic's impact for the plant's closure, Brookfield Business Partners CEO Cyrus Madon told investors in a quarterly earnings call Wednesday that the crisis has hit the company hard, shuttering production for periods worldwide.
"Management is focused on mitigating financial impacts by adjusting production and scaling labor and other costs to demand. At the plants this included eliminating over time, utilizing temporary staffing, reducing shifts in lines and temporarily idling production," Brookfield Chief Operating Officer Denis Turcotte added.
In a Thursday statement, U.S. Sen. Tom Carper (D-Del.) offered his help to the affected Clarios workers and said that the pandemic had played a part in the closure.
"The news that Middletown’s Clarios battery plant will close this fall is a devastating blow to the employees and their families, and a body blow to the economy of Delaware. These are good manufacturing jobs for employees," the senator said in a statement. "In this unprecedented time, I know that businesses are having to make tough choices. Unfortunately, this closure, accelerated by COVID-19, is a stark reminder of the economic challenges we are facing. Even more importantly, it is yet another reminder of the all-too-real impacts that this pandemic is having on our friends and neighbors. Too many moms, dads, brothers and sisters have suddenly fallen on tough times through no fault of their own, and we must be there for them to help them regain their footing and rebuild."
The Delaware assembly plant produces millions of after-market lead-acid car battery “cores” each year, which are then filled with electrolyte and tested at the company’s distribution center in Middletown. Upon completion, the batteries end up in automotive retail stores.
Clarios produces about a third of all vehicle batteries worldwide, but its primary products are lead-acid batteries. In order to stay competitive, Clarios has begun branching out into two segments that diverged from the Middletown plant’s focus.
It is attempting to corner a part of the lead-acid battery market known as absorbent glass mat (AGM), which is usefully for commercial vehicles. As other plants converted to AGM assembly, the traditional lead-acid work was sent to Middletown.
With electric vehicles also growing in popularity, the company partnered with Toshiba to begin producing a lithium-ion battery for such vehicles at a Michigan plant.
The decision to shutter the Middletown plant comes less than three years after it completed a $43 million expansion of the facility, upgrading equipment and building an addition to the facility that dates at least to the 1950s. That project was supported by a $1.29 million incentive package approved by Delaware’s Council on Development Finance in March 2016, which reimbursed the company for 3% of construction costs.
Another $346,000 grant was supposed to subsidize the creation of 83 new, full-time positions at the battery plant once the addition was finished in 2017, but it’s unclear whether the company met those benchmarks. At the time, the extra positions would have pushed total employment at the plant to more than 400 employees.
Under the terms of the state's incentive package, the company was required to retain 347 employees through Dec. 31, 2021. Cessation of operations is grounds for the state to declare default on the grant and require repayment, although it's unclear whether Clarios could claim its distribution center as a continuation of its operations.
By Jacob Owens
jowens@delawarebusinesstimes.com
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