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Phillips & Temro's other plant staying

Firm says silencing-products facility won't join exit

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Phillips & Temro Industries has allayed fears a second manufacturing plant it owns in the city will suffer the same fate as the first -- pending closure and the transfer of jobs to the United States and China.

"They don't have any plans to change it," company spokeswoman Mary Ann McCauley said of Minnesota-based firm's Cowl Silencing facility at 100 Paquin Rd., which manufactures industrial engine intake and exhaust-silencing systems. "It (relocating the operations) is not on the table."

The company is in the process of winding down operations at its Winnipeg heating-products plant, which manufactures items such as block heaters, car warmers and battery warmers for the automotive industry, and transferring the 170 jobs to sister plants in Eden Prairie, Minn. and in China, which also produce heating products.

A representative with the union that represents those workers -- Local 9074 of the United Steelworkers -- said Wednesday she wouldn't be surprised if 30 to 35 workers at the Cowl Silencing plant suffer the same fate.

Leslie McNabb said Phillips & Temro has another plant in Prior Lake, Minn., that produces industrial silencers. So she wouldn't be surprised if the company consolidates those operations there.

However, the company's website says the two plants produce different brands of industrial silencers, with different features and benefits. McCauley said that could be one of the reasons why the company plans to maintain two separate plants.

The company's announcement in April that it will close down its Winnipeg heating-products plant by the end of this year came a few months after the firm was purchased by a U.S. private equity fund -- Boston-based Audax Group.

A local economist said Thursday the move is not surprising in light of the recent ownership change.

Michael Benarroch, dean of the University of Manitoba's Asper School of Business, said it's is not uncommon for private equity firms to buy companies around this size, especially ones that have multiple plants, and try to make them more profitable by consolidating some of their operations.

"My suspicion is that they've done an analysis... and believe there can be more profitability achieved through economies of scale and reduced costs," he said.

Benarroch also noted labour and production costs are lower in China, which could have been a factor.

McCauley confirmed economics was the reason behind the decision to shift the heating-products work to Eden Prairie. She said the company's head office, engineering and customer service operations are all based there.

"So it just made sense getting it all in one spot. There will also be economies of scale achieved by having all of that manufacturing in one spot."

She said between 100 and 120 of the heating-products jobs will be moved to Eden Prairie, Minn., and a still-to-be-determined number will be transferred to the plant in China.

But the wage difference wasn't a factor in shifting work to China. That was done so the company can produce more heating products for the Asia Pacific market, which the plant in China services.

She also stressed the closure of the heating products plant in Winnipeg isn't because it's losing money, wages are higher, or the quality of work was inferior.

"The quality of work there has been great. And it was profitable."

Republished from the Winnipeg Free Press print edition July 13, 2012 B4

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