SPRINGFIELD, Mo., Jan. 22, 2010 (GLOBE NEWSWIRE) -- Paul Mueller Company (Pink Sheets:MUEL) announced that the employees of Sheet Metal Workers' International Association Local 208 voted today to accept a new three-year labor agreement. The prior contract was set to expire on April 21, 2010; but Company management and representatives of Local 208 elected to open the negotiations early in order to achieve a new agreement prior to the expiration date.
The current economic crisis that began during 2008 has had an adverse effect on Company performance, primarily during 2009. In late November and early December 2009, the CEO/President, with his senior staff in attendance, held employee communication meetings for all Springfield employees. During those meetings, the financial performance of the Company was reviewed and discussed. Performance was reviewed by "Business Unit," "Product Line," and "Operational Facility." The Company acknowledged that, due to the recent economic climate, the strategy adopted in 2005 of growing the top line revenues to achieve long-term bottom-line profitability was, in the short term, no longer sustainable. As a result, the Company put into place a cost-control plan for 2009 focused on cash flow and emphasizing quality new order bookings. At the same time, an extensive reevaluation of the entire operation was undertaken. All scenarios for change were considered, including (but not limited to) consolidation of existing fabrication facilities, moving production to localized satellite facilities to better serve specific markets, elimination of product lines, etc. A key element of the evaluation, and the ultimate solution, was to recognize that the financial results clearly indicated that the product lines fabricated at the main Springfield plant have not been profitable. As a result, during 2009, the Company implemented what it refers to as a "Right Sizing" plan committed to turning around the operations in Springfield.
The Company eliminated non-bargaining unit positions that totaled over $13,000,000 of annual compensation, signed a new contract that continues an on-site clinic where employees and their dependents can see a doctor at no cost to them, negotiated a new health care contract, made changes to the current health care plan, simplified internal operating processes, implemented a new ERP system, and revamped the Industrial Equipment marketing/sales organization. In addition, Local 208 employees agreed to forgo a wage increase scheduled to take effect in April 2009, and this was consistent with the wage freeze for non-bargaining unit employees that was effective for 2009. These changes are projected to reduce the indirect costs of Industrial Equipment business by approximately 40%.
It is important to understand that Paul Mueller Company is no longer simply a Springfield, Missouri, tank fabricator; in fact, during 2009, the Springfield plant generated about one-third of the Company's total worldwide revenue. Springfield is, however, where the Company began operations and is the location of the corporate offices; and the Company is committed to maintaining a successful presence in the local community.
Looking to 2010, the level of new orders entered during December 2009 was positive and the outlook for 2010 is encouraging, as quoting activity for Industrial Equipment has improved. As a result of the "right sizing" efforts and with the new labor agreement, management and its union employees are committed to continue working together in the best interests of the Company, fellow employees and their families, and the Company's shareholders.
To date, the Company has returned 116 employees to work at the Springfield plant, and additional callbacks will be made as required to support production levels.
The Sheet Metal Works' International Association, Local 208, and Paul Mueller Company jointly approved this statement for release.
This press release contains forward-looking statements that provide current expectations of future events based on certain assumptions. All statements regarding future performance, growth, conditions or developments are forward-looking statements. Actual future results may differ materially from those described in the forward-looking statements due to a variety of factors, including but not limited to the factors described on page 34 of the Company's 2008 Annual Report. The Company expressly disclaims any obligation or undertaking to update these forward-looking statements to reflect any future events or circumstances.