Keystone Will Shutter Columbus Plant

Keystone Will Shutter Columbus Plant Keystone Powdered Metal Co. announced its plant in Columbus, Ohio will close by July 2007. Founded in 1927, Keystone is still majority owned by one of the founding families. The company produces a wide variety of powdered metal components -- plain bearings, bushings, bearing races, gears, sprockets -- primarily for the troubled North American auto industry. The remaining 30% of production goes into appliances, oil and gas, agricultural and industrial markets. The Columbus plant closing will leave Keystone with approximately 700 workers across three facilities: St. Marys, Pennsylvania; Lewis Run, Pennsylvania; and Cherryville, North Carolina. Like several other powdered metal technology manufacturers, Keystone's headquarters is in St. Marys, Pennsylvania. St. Marys is by far Keystone's largest plant, at almost 600,000 square feet. The company's total annual sales are approximately $85 million. Opened in 1987, Columbus is a 100,000 square foot facility equipped with mid-range presses (200 - 825 ton). With annual sales of approximately $15 million, current employment is just over 50 workers, less than a third of its peak in the late 1990's. Most of the remaining workers will be laid off by the end of April, with a skeleton crew staying on through June. At one time, the Columbus plant owed its existence to large orders for camshafts to a Ford Motor Company engine parts supplier. When Ford changed to forged cams in 1999, Columbus was forced into massive layoffs and never recovered from the loss of that volume. Powder metallurgy is a manufacturing process using an almost unlimited combination of powdered metal alloys, injected into molds and heated under extreme pressure in special presses. At the high end, powder metallurgy can employ alloys unproduceable by any other method, and the tooling can produce very strong, complex, net parts needing no secondary operations. Antilock brake sensor tone rings, toothed cogs often attached to wheel bearing hub units, are a simple example and common application of powder metallurgy where use of a machined component has become prohibitively expensive. Similar cost situations are found with many specialty impregnated or alloy plain bearings and bushings.Keystone's plants have presses ranging from 3 tons to 1500 tons. Powder metal components can be far less expensive than standard machined parts. But due to the process' inherently high fixed costs, it is most competitive with standard machined components only at relatively high production volumes. With the U.S. auto industry slumping, many powder metal plants serving it have been facing growing financial pressure to downsize or mothball capacity until the industry turns around. In 2005, Keystone's board retained a financial advisor to, "explore a possible sale or merger of the company," to "review strategic alternatives to enhance shareholder value," but it currently has no sale or merger activity pending.