Waupaca to idle most of Etowah foundry, cut 540 jobs

In the biggest layoff in Tennessee in nearly two and a half years, the Waupaca Foundry is planning to cut 540 jobs in June as it idles most of its automotive casting foundry in Etowah.

A decade after Waupaca reopened its Etowah foundry following a yearlong shutdown during the Great Recession, the company said in a layoff notice received by the state Wednesday that it will idle its melt, molding and core room production in McMinn County by June 14. Waupaca, which operates a half dozen other automotive castings plants, said it will shift some of its production to Waupaca's other, larger facilities.

Waupaca will continue iron casting processing operations in Etowah but with only a fraction of the 683 employees the company had at the 21-year-old plant at the beginning of the year, according to the McMinn County Economic Development Authority.

"Our responsibility to our customers and our team members rests on our long-term sustainability," Waupaca Foundry President and CEO Mike Nikolai said in a statement announcing the plant cutbacks. "We will continue to supply the high-quality cast and machined components and service that Waupaca is known for in the market."

Some production will transfer to other operations owned by Hitachi Metals Ltd., which acquired Waupaca in 2015. Nikolai said some parts now made in Etowah will be produced at Waupaca Foundry plants located in Marinette, Wisconsin, and Tell City, Indiana.

"The production shift aligns manufacturing efficiencies with market demand," he said in a news release.

Waupaca makes about 250 different types of brake castings, differential and other engine and body parts ultimately used in models of most of the major auto manufacturers. The Etowah plant is the newest and smallest among the six plants operated by Waupaca, a division of the Hitachi Metals Group company.

According to Global Market Insights, automakers are shifting to lighter-weight materials to replace cast iron parts in order to achieve better fuel mileage.

"Stringent government regulations imposed by regulatory bodies will motivate automotive manufacturers to minimize vehicle weights," Global Market Insights said in a recent report. "The traditional metals such as cast iron are now being replaced by lightweight materials like aluminum to reduce overall vehicle weight along with improvement in vehicle efficiency."

Local officials said they hope Waupaca will be able to bring back its staff at a later date. When the automotive slump slashed automotive sales during the Great Recession, the Etowah plant was completely idled for more than a year but was ultimately reopened in 2011 and has continued to grow over the past decade.

"We obviously hope that Waupaca will be able to bring back these jobs in the future as they have done in the past, but for now we'll be working to help those employees and their families who will be affected by these changes to find other jobs in our community," McMinn County Mayor John Gentry said Wednesday in a telephone interview. "Area employers have already begun to reach out and indicate their desire to hire many of the affected workers, and McMinn County is fortunate to be between Knoxville and Chattanooga, which are two strong markets with lots of jobs opportunities."

Waupaca is the third biggest employer in McMinn County, behind only Denso Manufacturing and the McMinn County school system, according to employment data compiled by the county's economic development authority.

Lindsey Ferguson, executive director for the McMinn County Economic Development Authority, said a job fair is being organized for May to help workers being displaced by the Waupaca cutbacks in Etowah.

"We'll be onsite with a variety of employers to hopefully be able to recruit some of these employees who are already skilled and trained and are a well-qualified workforce for other employers," Ferguson said in a phone interview.

Mary Schmidt, a spokeswoman for Waupaca Foundry at the company's headquarters in Waupaca, Wisconsin, said displaced workers also will be offered other jobs at other Waupaca plants.

Waupaca gave workers the required 60-day notice of their layoffs this week as required under the federal Worker Adjustment and Retraining Notification Act of 1988.

Waupaca Foundry is the leading supplier of cast and machined iron components for automotive, off-highway, commercial vehicle, and other industrial markets. Waupaca operates four iron foundries with 1.4 million tons of capacity, as well as machining and casting finishing operations in the United States. The supplier has operated the ductile iron foundry in Etowah since 2001.

The layoff is the biggest in Tennessee since the Omni Nashville hotel closed in Nashville in early 2020, idling 662 workers, as the pandemic hit the tourism economy, according to the Tennessee Department of Labor and Workforce Development.

The job cuts are the second such plant layoffs in McMinn County this year. In December, Resolute Forest Products announced it would idle its pulp and paper operations at its Calhoun, Tennessee, mill by February and lay off 350 workers. The Canada-based company said the move was needed to cut ongoing losses at the Calhoun mill, which, despite the strong market for its products, still lost $62 million over the past year.