Citing a market downturn, Federal Cartridge laid off 110 production workers at its ammunitions plant in Anoka over the weekend, company officials confirmed Monday.
Federal Cartridge lays off 110 workers in Anoka
Downturn in ammunition market spurs the layoffs.
March 7, 2017 at 5:01PM
Affected workers were notified Thursday and let go through the weekend. All layoffs are effectively immediately, said spokeswoman Amanda Covington.
The factory had roughly 1,430 employees before the announcement.
News of the layoffs came as a surprise to state officials, who in November approved $1.15 million in state grants and loans for Federal Cartridge.
The funds were designed to assist the company with a $33.9 million factory expansion and equipment upgrades in Anoka.
The project had promised the addition of 50 additional jobs.
The building project remains on track, but the hiring goals are off the table and the loan and grant requests have been withdrawn, Covington said.
The Minnesota Department of Employment and Economic Development learned last week that "both of those awards have been canceled because … they no longer needed the state incentives to continue their projects," DEED Spokesman Shane Delaney said.
Doug Borglund, the community development director for the city of Anoka, said the city also just learned that the city's help would not be needed.
Covington said that Federal Cartridge, which is a subsidiary of Utah-based Vista Outdoor Inc. and formerly a unit of Alliant Techsystems, said the company notified the state and city as soon as it realized it would not be able to live up to the hiring pledge made in November.
"Market conditions have changed," she said. "And it was important to us to maintain a good working relationship with the state of Minnesota. As soon as we recognized that we would have to do a head-count reduction, we felt it was prudent to notify the city and the state. Out of fairness to the state and taxpayers, we wanted them to be able to use those funds for other projects rather than wait on us."
The plant expansion and equipment upgrades are just starting in Anoka and are expected to be finished this summer. The end result will be a more efficient plant, Covington said.
In an earnings release last month, Vista Outdoor CEO Mark DeYoung noted that "The challenging retail environment we experienced in our first and second quarters worsened in our third quarter following a slow hunting season and the national elections. This resulted in the need for increased promotional activity to support sales and maintain market share. We have also seen increased inventory in our retail and wholesale channels."
Analysts have noted that Federal Cartridge and other ammunition makers had expected that an election win for Hillary Clinton in November might have spurred sales as gun-rights enthusiasts stocked up on guns and ammunition for fear of tougher gun regulations to come. Such forecasting was thrown to the wind when President Donald Trump won the election.
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