Plans to close Salisbury plant a blow to economy

A Texas defense contractor appears unlikely to reverse a decision to close its plant in Salisbury, despite appeals by elected officials, including Sen. Barbara A. Mikulski.

The Eastern Shore city, still working its way back from the recession, is eyeing a future without the company's 650 jobs to shore up its tax and employment base.


Labinal Power Systems is an aircraft parts supplier that makes wire harnesses for military aircraft, including the Boeing Chinook helicopter, at the Salisbury plant. The company, a unit of French aerospace firm Safran, announced plans last month to close the plant by the end of 2016, consolidating its operations in Texas, citing increasing competition and price pressures.

Elected officials, including Mikulski and Lt. Gov. Boyd Rutherford, met with company leaders last week in an effort to get them to reverse the decision.


The company agreed to work with local officials to find a new use for its facility, help locate alternative jobs for workers, perhaps at nearby Wallops Island and Dover Air Force Base, and assist in retraining, among other promises. But plans to close by the end of 2016 remain in place.

"I'm deeply disappointed by Labinal's surprise decision to close their manufacturing facility in Salisbury," said Mikulski, the top Democrat on the powerful Appropriations Committee, in a statment. "I want the workers in Salisbury and their families to know I'm on their side. I will never stop fighting for them and for jobs on the Eastern Shore."

Mikulski said she supported $994 million in funding in the new budget for 32 Chinook helicopters with the intent of sustaining 450 subcontractors in 40 states, including about 400 workers at the Salisbury plant.

The layoffs are expected to start in May, as Labinal sizes down in thirds. Up to 150 of the 650 jobs could transfer to Labinal's Denton, Texas, facility, a company spokeswoman said.

Memo Diriker, founding director of Salisbury University's Business Economic and Community Outreach Network, an economic research and consulting unit of the Franklin P. Perdue School of Business, said the closure could be a "test case" for new Gov. Larry Hogan's administration, which has pledged to improve the state's business climate and help rural areas, where he received strong support in the election.

"I can't say it was too much of a surprise," said Diriker, citing the plant's past struggles, defense spending shifts and newer technologies as signs it might close. "It was an unpleasant event nevertheless, especially for those who are losing their jobs."

Hogan representatives have been in contact with local officials about help for workers who will be laid off.

"Making our state more attractive for new investment and putting a stop to the exodus of businesses from Maryland is a top priority," spokeswoman Erin Montgomery said in a statement.


Labinal said its decision had nothing to do with the state's business climate.

"The decision to close the Salisbury plant was strictly driven by increasingly competitive market and price pressures, and is no reflection of the business environment in Salisbury or Maryland," said Kerri Fulks, the Labinal spokeswoman. "We appreciate the support from elected leaders, as well as the local business community."

The county expects to lose $500,000 to $600,000 a year in income tax revenue as a result of the closure, according to Wayne Strausberg, director of administration for Wicomico County, who described those figures as a "conservative estimate."

"This is a significant employer. Those jobs are well-paying jobs, so for us it was very disappointing," Strausberg said. We "understand the business aspects of it, but it was very disappointing for us."

The unemployment rate in the Salisbury metro remains higher than the state average as the area has yet to fully recover the jobs it lost in the recession.

Mayor James Ireton Jr. said it is hard for Salisbury to compete, especially with the corporate haven of Delaware so close by. The city is working more closely with local universities and has launched a business incubator, among other efforts.


"I didn't vote for him, but Governor Hogan says Maryland needs to be more business-friendly. Here's a perfect example of where he can help," he said.

Local officials said they want to see reinvestment in Salisbury, making it a place where regional firms will look to expand into and local talent will want to stay.

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"We have to grow these things," said City Council President Jake Day. "We can't just move them from somewhere else."

Since Labinal made its plans public, the city has set aside $15,000 to hire David J. Wilk, national chair of corporate real estate and advisory services for the commercial real estate firm Sperry Van Ness, as a consultant on the property's redevelopment.

The plant sits across from the former Salisbury Mall property, leaving about 100 acres with the potential to be redeveloped.

"It represents a unique opportunity to take a 100-acre chunk of land in the middle of Salisbury and turn it into a really cool place in the future," Wilk said. "It's just a matter of time. Nothing like this can happen fast."


Diriker said he thinks Salisbury is better positioned than in the past to recover from the loss of the jobs, with general upturn in the economy, a more diverse jobs base and emerging entreprenurial scene, among other factors. Between 2010 and 2013, the city's population increased from roughly 30,340 to more than 31,500.

"There is definitely something happening in Salisbury that … I haven't seen before and makes me very optimistic about the future," Diriker said. "It will slow it down, but not derail it."