East Texas

By GREG JUNEK
Business Editor

The city of Jacksonville received more unsavory economic news on Friday, as the parent company of Astro Air announced it would shut down the plant in August, by which time about 390 employees would lose their jobs.

Those jobs will move to two larger plants, in Grenada, Miss., and Juarez, Mexico.

Astro Air makes heat exchangers for use in heating and air conditioning applications. Luvata’s statement said the closure and a North American manufacturing operations restructuring will improve its cost structure, capital utilization and competitive position.

Eric Tate, vice president of human resources for the ECO Heatcraft North America, a division of Astro Air’s parent company Luvata OY, said he does not know the frequency of the job reductions.

“It’s in our best interests and our employees’ best interests to do it in as minimal stages as possible,” Tate said.
Luvata, based in London, is a company in the portfolio of Nordic Capital, group of private equity funds focusing primarily on investments in the Nordic region.

Tate said the Jacksonville plant shutdown is the result of restructuring to make a leaner business following Luvata’s 2007 purchase of The ECO Group, which owned Astro Air.

“We have a lot of capacity in our existing facilities, both in Grenada and Juarez, and obviously the consolidation of this manufacturing facility will help us reduce our costs and better rationalize our assets,” he said. “The increasing pressures that we get from overseas competition, it drives us and everybody else to do everything we can to remain competitive.”

Darrell Prcin, Jacksonville Economic Development Corp. president, said Luvata had to make some tough decisions after acquiring the ECO Group.

“According to them, they had three plants, and they only needed two,” Prcin said. “The disheartening thing is here we are losing another Texas plant to Mexico.”

The loss of 390 jobs will hurt the small-town economy, he said. Cherokee County has about 21,000 employed people, so the loss will be felt, but the workers will find other jobs during the gradual shutdown of the plant.

“Some of those jobs will be absorbed by other companies that are looking for workers,” Prcin said, but the shutdown will negatively affect the unemployment rate.

“Anytime a community the size of Jacksonville loses 400 production jobs, it’s a setback,” he said. “We’ve got a lot of work to do to try to recoup those jobs.”

Rex Dacus previously sold Astro Air to the ECO Group. Luvata purchased the ECO Group last year. Luvata is the largest manufacturer of heating and air-conditioning coils in the world, Tate said.

Luvata also announced another one of its companies, Luvata Electrofin, formerly AST Electrofin, will not be affected by the Astro Air closure. Luvata Electrofin employs about 30 people in Jacksonville.