American wages make products too expensive
Grayling Industries, the industrial packaging company that moved from Juarez, Mexico, to Seaford in 2013, is moving back.
Grayling, a subsidiary of ILC Dover, is moving primarily because of higher U.S. wages.
Grayling’s move to Delaware was heralded as coup for American manufacturing in 2013, and the company says the American workers turned out better products. In the end, it came down to price.
“Our employees in Seaford are turning out product that is superior in quality to the product that we were turning out in Juarez,” Kenneth Elston, chief financial officer of ILC Dover, said. “It was just a combination of our hourly workers and our management team figuring out a way to make the product better. That said, the Grayling business was all premised on low-cost product. So, even though we were making a better product, we weren’t able to charge customers any more for making it in the U.S. Unfortunately, our customers have alternative approaches to their packaging needs. So we were not able to sell our products. We’re losing money. As a result, we have to move it back down to Juarez.”
Grayling moved from Atlanta, Ga., to Juarez in 1990, but it returned to the U.S. shortly after it was acquired by Behrman Capital, the New York private equity firm that owns ILC Dover, the manufacturer of NASA space suits and engineered fabrics and films.
“There was a desire to move jobs from Juarez to the United States, and we, through ILC Dover, spent quite a bit of money doing that — moving to Seaford,” Elston said. “The employees were fabulous. They did a great job down there in Seaford. The county was very supportive of us, and the state was supportive as well. We spent a lot of money trying to make it work. We just couldn’t make it work. It was ultimately an economic decision.”
Grayling’s brands include Guardia IBC container liners for liquid and dry applications, PaperIBC containers, Avail glovebags, Contro chemicals, D-Con disposable showers and Durapax disposal bags for asbestos abatement.
Grayling, which operates as the packing products line of ILC Dover, moved to Seaford with a promise of 115 jobs eventually, and, in return, the state offered the company incentives worth $552,360.
Delaware Economic Development Office Director Bernice Whaley said the company has agreed to repay the incentives. “I would much rather have the jobs than the money back,” she said.
Elston said the plant will be shut in stages over the next 12 to 15 months. About 70 employees will lose their jobs. Elston said those employees would certainly be considered for any openings that occur in ILC’s Frederica plant.
The company is leasing 90,000-square-foot facility in Seaford and a warehouse. Elston said ILC spent “a lot” of money on improvements and is hoping to find a lessee for both buildings.
“I was told they were really happy with the efficiencies they received from the Seaford staff,” Whaley said. They were really happy with the City of Seaford, the county and the state. There was nothing we could have done better, but, when it came right down to it, this particular operation was losing money here.”
“We’re hoping some of the employees may be absorbed in Frederica,” Whaley said. “I’m sure they are working through all that.”
Gov. Jack Markell said the news is unfortunate. “Our Department of Labor, along with our Economic Development Office, are committed to doing everything we can to assist the employees and families impacted by this decision. Seaford and its residents have a proud legacy of manufacturing success driven by its skilled and dedicated workforce and high quality of life. We will continue to work with Seaford and Sussex County to attract employers to the area.”