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September 9, 2008
Manufacturer Kaz Inc. is closing its manufacturing operations in Hudson and moving 300 jobs overseas, company officials told employees today.
The company employs about 350 people at its Hudson location, making it one of the largest manufacturers in Columbia County. But between now and June 2009, work performed in Hudson will be sent to Mexico, said Richard Katzman, president and CEO of the family-owned company.
Massachusetts-based Kaz makes a variety of products, including humidifiers, bug zappers, heaters, fans and thermometers. The company was founded more than 70 years ago, and it has at least 17 locations worldwide, including facilities in China, Taiwan, and Spain.
Annual revenue totals $500 million. The company’s products are carried at Wal-Mart, CVS and The Home Depot, among other major retailers.
Katzman said in an interview today that the company already outsources the majority of its manufacturing needs. But today’s announcement represents an even bigger push in that direction.
“From a business point of view, it wasn’t even close,” said Katzman, 51. “We are not chasing a lower-cost business environment. We are changing our business model—that’s a more profound change.”
Katzman said the transition will begin in December, with most of the job losses occurring in March and April 2009. Kaz will retain 50 non-manufacturing workers in Hudson who handle human resources, customer service, distribution and other tasks, he said, even after the manufacturing operations close down for good.
Katzman said he thought about moving the work to China, where the company has a couple thousand employees. But the cost of doing business there is also growing, leading him to contract with a company in Mexico.
Five years ago, the company evaluated its presence in Hudson and determined it was still more efficient to manufacture there, Katzman said.
But a year ago, those same calculations revealed that the benefits of outsourcing outweighed any advantages of making products in Hudson, Katzman said.
“This time, it became clear that the world had shifted,” Katzman said. “You start having to make decisions based on not losing money on your factories.”
The outsourcing saves the company “many millions of dollars” in costs, including expenses necessary to keep up the company’s 200,000-square-foot facility and its machinery, Katzman said. He declined to provide a more specific dollar figure.
“If it had been a close call, or even slightly less [of a difference], I wouldn’t have made the move,” Katzman said.
“The last thing I wanted to do was close the manufacturing here. It’s painful,” he added. “We’ll do anything we can to help bring jobs back into Hudson.”
The closing leaves the city of Hudson reeling. Earlier this year, furniture manufacturer LB Furniture Industries LLC closed down, eliminating 150 jobs in Hudson.
“I know exactly where [Katzman] is coming from. He needs to compete,” said Richard Scalera, mayor of Hudson. “But that doesn’t make it any better for those waking up this morning and not knowing what to do next.”
“That has a devastating, gut-wrenching effect on our economy,” Scalera added. “In the short-term, it’s almost impossible to replace these types of jobs.”
In the long-term, Hudson and Columbia County officials must start defining a new economic development strategy, Scalera said.
“We know we can’t hang our hats on manufacturing jobs anymore, because those are too fragile,” he said. “We have to change our economic ways here.”
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