Miller-Holzwarth Inc. workers were told Monday the plant would close at the end of the day, surprising most of them and the community.
There had been no warning given to workers or the community. In addition the company recently had received a government contract, said John Berlin, Salem mayor.
According to the Federal Business Opportunities website, Miller-Holzwarth had received a recent contract for $100,000 for a vehicular window. It’s unclear at this time what will happen with the contract.
The company manufactured periscopes, vision blocks, ballistic windows, transparent armor and specialty mechanical components. Miller-Holzwarth Inc. has been in continuous production of components for armored combat vehicles for more than 35 years.
The company had operated in Salem since the 1950s, Berlin said. Nearly all their work was produced for the government.
The government contract does not appear to have been enough to offset the loss in business incurred as cuts have been made to the nation’s defense budget. The Associated Press reports that billions of dollars in cuts in defense spending will occur as part of a deficit-reduction plan approved last year by Congress.
The Labor Department on Monday stated that federal contractors do not have to warn their employees about potential layoffs from the automatic, across-the-board budget cuts due to kick in Jan. 2. The guidance letter said it would be “inappropriate” for employers to send such warnings because it is still speculative if and where the cuts might occur, according to the Associated Press.
The closing will have an impact on the city’s finances. Estimates based on the 1 percent Salem income tax are that the city will lose $25,000 to $35,000 a year based on Miller-Holzwarth’s closing, Berlin said. The estimates were based on Miller-Holzwarth’s having 80 employees.
The whole local economy stands to lose if the business is unable to reopen, he said.
“The saddest part of the whole thing is for the employees who will lose their source of income,” Berlin said.
The contract provides some hope that someone might be able to take over the company and restructure things to make the finances work, he said.
“When something like this happens, it provides opportunity,” he said. “There may be an entrepreneur out there who has done something similar.”
Jennifer Moll, owner and president of the company, could not be reached to comment.