A drop in demand is behind a decision to furlough 103 employees at Eaton's Spencer plant, according to company officials.
Plant management told employees about the decision beginning with the night shifts on Thursday, according to Eaton Human Resources Manager Scott Moore.
The 103 layoffs come from the 405-member workforce at the Spencer hydraulics facility. The company manufactures pumps and motors for the industrial, agricultural and construction markets.
"We have to adjust our staffing at the plant based on business level," Moore said. "We're seeing a softening in our sales. That is spurred on by a decline -- our plant primarily supports agriculture and construction markets. Construction sales are declining, that means less demand, lower build rates and obviously, when there's less to build, that is going to impact the staffing levels at the plant."
The company will continue to monitor market conditions in 2009, according to a statement from the plant. It is not known if impacted employees can be reinstated in the future.
"We hope for as quick as possible," Moore said. "When we see an uptick in business, we certainly want to do that. But it would be premature to speculate right now on that."
Moore said the company won't see the full extent of reductions until after the first of the year. As part of the annual calendar, employees typically are off from Dec. 24 through the Jan. 1.
"We're heading on a two-week shutdown here at the plant and we needed to take some interim measures -- one -- just to tell people what is going on before they break for the holidays as the right thing to do and then -- two -- when we get back to work, we're going to have a smaller build rate than we've had in the past, so we're going to have to adjust for that."
The company extended the amount of time the plant will be closed by three days -- Dec. 22, 23 and Jan. 2 -- as a cost-saving measure. The 103 furloughs are effective Jan. 5.
Eaton officials said they will work with the Iowa Unemployment Commission to determine unemployment benefit eligibility for employees affected by the company's decision.
Since the furloughing process is an interim measure, Eaton hasn't taking any of the employee outplacement measures that come with a formal severance.
Moore said Eaton still considers Spencer a viable location for the company and doesn't consider the layoffs a warning sign for a permanent shutdown of the plant.
"These activities are in no way a reflection of the workforce out here," he said. "We're very proud of the workforce."
The company's other measures to cut costs including included voluntary layoffs, reduced overtime, and plant shutdowns.
Temporary employees were removed before any action was taken involving the company's core employees.
"We've been a part of the community now for roughly 35 years and look forward to being part of the community moving forward," Moore said. "Certainly it's difficult times for a lot of places and this was obviously an announcement that no one wanted to have to deliver or hear. We just are focused on treating people with respect and care during these kinds of announcements."
A similar cutback is taking place at Eaton's Shelby, N.C. location. Associated Press reports from the East Coast said the company is laying off 87 employees and will have 327 at the start of 2009.