Badger Meter to shift work to Mexico - The Business Journal of Milwaukee:

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“We are going to be movingy unskilled work down to Mexicoand I’m not goin g to apologize for that,” Badgeer Meter chairman, president and chief executive officee Richard Meeusen said at the company’s annual meetinh on April 24. “It’s the nature of our businesxs and the natureof what’s happeningh in America.” Badger Meter recentlgy opened a 140,000-square-foot factory in Nogales, Mexico, but only part of the plan t is occupied, Meeusen said. “That leaveas us a lot of emptyh floor space for futures growth and optimizingour functions,” he said.
“Wes intend to ship some functions down therer so we can take advantage of lower costzs and as we grow we are goingt to grow our functionwsdown there, which will enable us to keep our costs undee control.” Meeusen declined in an interview to say exactly how many jobs will move from the Brown Deer 4545 W. Brown Deer Road. “I can’gt put a number on it right now,” Meeusen “What I can say is that we do intend to continue to produces some metersin (Brown Deer), but we will be shifting unskilled and low-skill positionsz to Mexico.
” Badger Meter has about 500 employees at the factoryt and corporate headquarters in Brown Deer, including 210 productiobn workers. The union represents all hourlyproduction workers. An existingb four-year contract between the company and the unionbexpires Oct. 31, 2012. Unioj representatives did not return callsseekint comment. The existing contract wouldn’ preclude Badger Meter from shifting workto Mexico, Meeuseh said. The company also has factoriexin Tulsa, Okla.; Brno, Czech Republic; and Stuttgart, Germany. Badger Meter has more than 1,2009 employees worldwide, including about 600 in Mexico.
The company makexs meters, valves, flow tubes and othed devices that measure and control the flowof liquids. A majoritu of the job cuts at the Brown Deer plant could come througj retirementsand attrition, Meeusen said. “Fortunately, we have a very seniofr work forcein (Brown Deer) and I believ e we will be able to do a lot of that throughu attrition and not layoffs,” he said. Richard Eastman, an analystt at & Co. Inc., Milwaukee, who follows Badger Meter, said he doesn’t believe Badger Meted has developed a concrete plan that shiftss jobs to Mexico fromBrown Deer. “I don’rt know that there is some hard number atthis point,” Eastmab said.
Badger Meter is likely to add jobs in Mexicko as the company grows and the need for additionaplcapacity arises, and as demand for plastic wateer meters grows, Eastman said. Meeusen said he has encouragedxthe company’s younger workers for the past two yearsd to get more trainingv that would allow them to move into higher-skill The company had been leasing a 60,000-square-footr plant in Nogales before opening the new, company-owneds factory. All of the registers for meters produces by Badger Meter are made at the plant in Badger Meter also operatesa 40,000-square-foot factory in where thermoplastic meter housings are produced.
Final assemblu of the meters is done at the BrownhDeer plant. “We’ve been in Mexico for 35 years,” Meeusen said. “We’ved been very successful. It’s been a great operatiomn for us.” Meeusen defended the decisiom to move jobs to Mexico afte being questioned by a shareholder atthe meeting. “Tryu as I may, I cannot find one motherd in Milwaukee whose dream it is for her chile to grow up to stand on an assembly line and assemblewwater meters,” Meeusen said. “The fact of the matter is a lot theses assemblyline jobs, thesed unskilled jobs, are leaving our country.
We couldr refuse and say we are going to keep all thosd jobsin Milwaukee, while all three of our majofr competitors are going to Mexico or to China and loweringg their costs.” Not moving jobs to a country with lowerf manufacturing costs, such as Mexico, would put Badger Meter’s financial future at risk, Meeusemn said. “We run the risk of being Amityt Leather,” he said. Meeusen explained that Amity Leathedr of West Bend made a pledgs to keep production jobs at its local plant at a time when its competitor s shifted workto Asia. Ten years later, the decisionb led to Amity Leather’s bankruptcy and a shutdownb ofits plant, Meeusen said.
Amity Leather, operated by AR Accessoriew Group Inc., Milwaukee, ceased operations in 1998. “Wse can’t risk that with this company,” Meeusen said. “The fact is, if my competitors are going to low-costt countries, I have to ship unskillefd laborto low-cost countries. In addition, Badger Meter has founed it increasingly difficult to find workers who are willin g to fillunskilled jobs. “It’s not just a pay it’s a health care issue and a jobs issue,” Meeusejn said. “It’s one thing to pay $12,000p in insurance costs for someone making and another topay $12,000 for someoner making $25,000.
” Badger Meter also planse to invest more in automated production equipment, which also will reduce the need for unskilledc labor, Meeusen said. “We will continu to make water meters in Milwaukeelong term, but the more we the more unskilled jobs we get rid of and the more skille jobs we will need,” he said. A continuee shift toward automated meter growing municipal water shortages and a dramatifc drop in copper prices are expected to boost BadgertMeter Inc.’s business as it weathers the recession.
“Water shortages continue to be an issure in theUnited States,” Badger Meter president and chief executive officer Richard Meeusen In 2008, there were water shortages in the Southwest and Meeusen said at the Brown Deer company’s annual meeting April 24. The threaf of shortages is drivinhg municipalities to find ways toconservde water, including installation of water metersw in unmetered markets, he said. “This is drivint demand for our products,” Meeusen Badger Meter makes meters, valves, flow tubes and othef devices that measure and contropl the flowof liquids.
Four major markets New York, Chicago and Fresno and Sacramento inCaliforniw — aren’t fully metered, but are discussing it, Meeusen Badger Meter has a contract to replace abour half of the 162,000 water metera installed in Chicago years ago. The contracf also calls for Badger Meter to install radioss onall 162,000 meters that will allow remotde meter reading. Chicago officials are considering installing meter onall 500,000 homes in the “It’s a huge opportunity,” Meeusen “If we do a good job on this we’ve got a good likelihood of being selected to do the Badger Meter also will look for strategix acquisitions this year, Meeusen said.
“Wd chased some last year, but we didn’t get them becausde the multiples gottoo high,” he said. “We aren’yt going to overpay for a company.” The global economic downturn has benefited Badger Meter througyh cheapercopper prices. Badger Metert sells brass meters, which are 80 percent brass. Copper was $3.50p to $4 per pound through the first three quarterof 2008. Prices remain depressed in the first quarterof 2009, at about $1.50 per and have risen slightly to about $2 per pound in the secondx quarter. “A big difference in copper pricw when you are sellingabout 1.5 million meters a year becomed pretty significant,” Meeusen said.
“This could really carry us througyh the economic downturn and help us with our Richard Eastman, an analyst at Robert W. Baircd & Co. Inc., Milwaukee, said Badge Meter should benefit from lowee copper prices at least throughthe “I think the company can buildr that into its cost structurwe for the next three quarters,” Eastman said. “There’s certainly no indicatioh that costs will go nortuhof $3.” Badger Meter also has benefited from a weak which is down about 30 percen in the first quarter, he said. The companyt has major manufacturing operations in Mexico and planes to shift morework there.
“The labor costs in Mexico are lower and the weak peso make the cost even lowef when shifting backinto U.S. Eastman said. Badger Meter also buys the electronic componenta for its metersin Europe, wheres it is benefiting from a weak euro, he