SOUTHINGTON — Rex Forge, a forging company that supplies the automotive industry, plans to shut down and lay off 103 employees because it said that its sole customer has unexpectedly ended its contract.
The Southington-based company, which has a facility at 355 Atwater St., in the town’s Plantsville section, disclosed its situation in a layoff notice sent Monday to the state Department of Labor and Southington Town Manager Alex Ricciardone. The catalyst for the firm’s expected shutdown was its notification on Jan. 29 that its sole customer, Dana Corp., had exercised its right to terminate its contract, according to the letter.
“The termination of the contract was unexpected and unforeseen. Rex Forge had every reason to believe and expect, from the daily actions and communications with Dana, that future business would continue,” Colleen Hedges, Rex Forge's controller, said in the letter. “It was shocking to receive the notice that Dana no longer wished to do any business with Rex Forge. Without the Dana contract, which represents the sole business for Rex Forge, the company has no ability to continue on and will be shutting down its operations permanently.”
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Employees have been informed of the plan to close the Plantsville facility and make the layoffs, which are scheduled to take place between Feb. 10 and Feb. 24, according to the letter. The layoffs appear to affect all Rex Forge employees, as the list of affected positions included with the layoff notices includes the CEO, the chief operating officer and Hedges’ position. Other affected positions include 16 trimmers, 15 forgers and 10 sprayers.
The company will provide support to employees that includes “outplacement services,” according to the letter.
A message left Monday for Ricciardone inquiring about the extent of support that town officials planned to provide to Rex Forge employees was not immediately returned.
Dana Corp. appears to refer to Dana Inc., a Maumee, Ohio-based company that makes drivetrain and electrified-propulsion systems for passenger vehicles. The company recently announced a cost-cutting initiative that aims to save $200 million by 2026 and a plan to sell its off-highway business.
“While Dana continues to improve its profitability in a challenging operating environment, the company announced further actions to support sustained long-term profitability and enhanced cash flow generation,” Dana officials said in a Nov. 25 news release. “This includes substantial reductions in selling, general and administrative costs across all the company’s businesses and engineering expenses to match current industry dynamics, including the ongoing delay in the adoption of electric vehicles.”
Among other recent developments, a dispute pertaining to Rex’s timing and delivery of goods to Dana and Dana’s debiting of Rex’s account for those goods was resolved through arbitration last month, according to a filing in a federal court in Ohio. An arbitrator awarded Dana a total of about $965,000 for claims related to excess freight and “non-conforming charges,” while Rex was awarded about $144,000 on its claim for “improper debits” taken by Dana, according to the filing.
Dana officials were not immediately available to comment on the layoff notice.
Rex Forge was founded in 1867 as the Atwater Manufacturing Co. In recent years, it has focused on the “heavy truck and off highway vehicle; light truck and automotive; fluid control; and ordnance industries,” according to its website.
“While always maintaining a primary focus and expertise in serving the automotive and truck industries, during the 1900s Rex Forge expanded into serving customers in the mining, railroad, fluid control and ordnance industries as well,” says part of a summary of the company’s history on its website. “Rex Forge underwent a large transformation beginning in the 1980s, when much of its business shifted from hammers to mechanical presses, utilizing newer technology and increasing the Company’s efficiency and breadth of capabilities. The plant was expanded several times as new equipment was added to facilitate growth.”