Hauppauge-based Festo U.S. moving 125 jobs to Midwest
A seller of automation equipment used in factories will move much of the manufacturing and shipping work it does in Hauppauge -- and the 125 associated jobs -- to the Cincinnati area by 2016, officials said.
Festo, which is based in Germany, has outgrown 395 Moreland Rd., home to its U.S. subsidiary, a top executive said. He also said Long Island is too far from Festo's customer base in this country, which has shifted west and south.
Rich Huss, chief executive of Festo U.S., confirmed 125 jobs would be cut from a Long Island workforce of 250. Corporate officers, the engineering department, laboratories and some production and shipping activity would remain on the Island -- but possibly be housed in a different building.
The company has been here since 1972.
"Long Island has been a great place for us to be, but like many things nothing is constant, and we need to expand our business in another area," Huss said Friday.
Local factories employed 72,500 workers in March, about half the number they did in 1990, according to the state Labor Department. In the past year, manufacturers shed 1,200 jobs.
Festo's customers, said Huss, increasingly expect products to be delivered in one day. The Hauppauge plant can do that for only 40 percent compared with Cincinnati's 75 percent.
"We also realized our existing facilities weren't large enough to handle our future growth," Huss said. Festo's U.S. sales have climbed 40 percent since 2010, he said, to exceed $100 million per year.
Local employees were told about the new factory and warehouse in the Midwest in September. They will be allowed to apply for the jobs there and if hired, will receive the same pay rate, and have some moving expenses reimbursed. They also will be able to visit the area before deciding whether to remain with Festo.
Still, Huss acknowledged some workers won't be able to leave Long Island. "We did as much as we could after the decision was made . . . We will do right by them," he said.
Hoping to keep the Hauppauge plant open, New York State, Suffolk County and Brookhaven Town offered tax breaks and other incentives to reduce Festo's operating expenses. But Huss said, "It wasn't as much about cost as being closer to our customers."
The business already has its electric bill reduced by the state and until recently received tax breaks from the county.
Adams said last week that the state "will continue to work with the company, and we remain optimistic about their commitment to maintaining their U.S. headquarters" here.
Anthony Manetta, executive director of the county's industrial development agency, said the governments "worked with Festo for close to a year and a half in an effort to keep their production here. However, ultimately, it was a supply chain and distribution issue that led to their decision."