FLORENCE, Ala. - A factory that employs hundreds of people manufacturing railroad cars in north Alabama is closing amid declining demand linked to the coronavirus pandemic.
FreightCar America announced Thursday it is shutting down its plant at Cherokee and plans to abandon the facility by early next year to consolidate operations in Castanos, Mexico.
Kevin Jackson, president of the Shoals Economic Development Authority, said the factory has about 500 workers, according to the TimesDaily.
The factory makes cars used to haul bulk goods and other items. The problem of depressed demand for freight cars has been made worse by the pandemic, and the company is trying to get ready for "immediate success" after the downtown, said a statement by chief executive Jim Meyer.
"The efforts of our Shoals' team helped us to reduce our breakeven production levels by roughly one-third since the start of the plan," Meyer said. "However, the ongoing impact of the industry downturn has been further intensified by the COVID-19 pandemic and required an additional and significant response to both protect our franchise and reposition the business for immediate success post-downturn."
FreightCar America designs and builds several types of railcars. Opened in 2008, the Cherokee facility has seen operations by FreightCar since 2013, when it subleased 25 percent of the plant from Navistar. In 2018, FreightCar announced the acquisition of Navistar's assets. Last year, the company closed its Roanoke, Va. plant and shifted the work to Cherokee.
The company is negotiating its exit with the Shoals facility's owner and landlord, the Retirement Systems of Alabama, the company said. The factory encompasses 2.2 million square feet.
The shutdown will save more than $20 million annually in fixed costs and make it possible for the company to break even by producing less than 2,000 cars annually, the company said in a statement.