U.S. Elevator Shifting Jobs to Mexico

Bowing to increasing competitive pressure and trying to cut operating costs, Cubic Corp.’s U.S. Elevator subsidiary plans to lay off about 100 employees and shift an equal number of jobs across the border to Mexicali, Mexico, as of June 1, officials said Monday.

George Tweed, president of U.S. Elevator, said that if the company does not reduce its manufacturing costs and prices, it would lose at least 100 manufacturing and support jobs at its Spring Valley manufacturing plant within a year because of slumping sales.

“This is a cost-sensitive market,” Tweed said. “It’s the low bidder who gets the job and nearly all the elevator companies have already gone off-shore” to shave their costs.

The average Mexican weekly wage will be about $80, compared to $360 for the average U.S. Elevator worker about to be laid off, Tweed said.

U.S. Elevator is currently profitable, but operating earnings dropped to $5.9 million in the fiscal year ended Sept. 30, from $6.1 million the prior year and $9.5 million in 1982. Sales fell more rapidly, to $86.7 million from $91.1 million a year earlier and $108 million in 1982.

Tweed said the company will be “hard pressed” to match last year’s results. But, with the ability to cut its costs and prices, Tweed forecast that U.S. Elevator could double its sales in five years.

Once that happens, he said, the Spring Valley operation could rehire as many as 100 workers. U.S. Elevator currently employs 1,200 workers nationwide, 400 of them at the Spring Valley facility. Overall, Cubic Corp. employs about 4,400 workers, up about 10% from one year ago.