Mercury Marine officials are weighing their options for potential consolidation of the engine manufacturer's plants in Fond du Lac, Wis., and Stillwater, Okla., with a decision expected by the end of the summer.
"All of our facilities are underutilized," Kevin Grodzki, Mercury president of marketing, sales and commercial operations, told Soundings Trade Only.
Mercury's production level has dropped about 55 percent in the last two years. In that time, the company reduced the work force at its two major plants - from 3,600 to 1,900 in Fond du Lac and from 1,300 to less than 400 in Stillwater.
The Brunswick Corp. engine subsidiary has manufacturing facilities in Mexico, Japan and China, in addition to the two main plants in the United States. Grodzki said company officials are looking at all of these facilities for ways to cut expenses.
However, he said more emphasis is being placed on the U.S. plants because they share similar functions. Although the Fond du Lac plant manufactures outboards and the Stillwater facility makes MerCruiser engines, both facilities perform casting, machining and assembly operations.
"Our options are going to include all of our manufacturing facilities, but we are focusing a lot on the complementary capabilities we have at Fond du Lac and Stillwater," Grodzki said, adding that "consolidation of operations is a potential outcome."
During the last several months, Mercury executives have been meeting with local and state officials from Wisconsin and Oklahoma to discuss incentives designed to keep the plants in their respective locales.
"We have had progressive dialogue with both the State of Wisconsin and the State of Oklahoma," said Grodzki. "Both states recognize the importance of Mercury Marine to the local economies."
Mercury did not provide details of the incentives offered, but Grodzki indicated incentives are not the only factor to weigh before making a decision.
Starting next week, Mercury executives plan to meet with union officials in Fond du Lac to renegotiate existing contracts with an eye toward trimming costs through wages and other savings.
"We still have more work to do and more facts to put together, and then we'll put that into a detailed evaluation model," said Grodzki. "There are a lot of different things to consider - the customers; the communities, which have decades-long dependence on Mercury as a core part of their economies; employees; and the fact that we want to emerge from this downturn a stronger, healthier company."
— Melanie Winters