Rheem to use $1.6 million government grant to close two factories and cut jobs

Rheem Australia is using a $1.6 million grant from the federal government’s Clean Technology Program to enable it to close two factories and make redundancies.

Rheem revealed to SmartCompany this morning that it is closing its Australian air-conditioning business, Accent Air, which is based in Liverpool, with operations planned to cease before the middle of 2014.

Matt Sexton, the chief executive of Rheem, said the closure “will result in some redundancies”.

“The closure is a consequence of a number of factors, particularly the high cost of manufacturing in Australia for an air-conditioning market that is increasingly dominated by cheaper imports,” Sexton said in a statement.

“We are very mindful of the impact these changes will have, particularly to our employees. Wherever possible we are looking to redeploy people within Rheem’s water heater business.”

Rheem set out its plans to close the factories in its application for a Clean Technology Food and Foundries Investment Program grant of $1.6 million. 

“Grant funding will be used to consolidate five manufacturing facilities into three centres of excellence and replace ageing machinery with more energy efficient equipment,” Rheem said.

The second factory site set to be affected by the “consolidation” is Rheem’s Scoresby site in Victoria. 

Gareth Jennings, spokesperson for Rheem, told SmartCompany consolidation at Scoresby has already started and “the Scoresby site is pretty much a done deal”.

“We will hopefully be making just as many water heaters as we have in the past,” he says.

“At the sites going to be affected by the changes, some of those changes have already started happening.”

Rheem will initially make 18 redundancies at the Liverpool site, while the number of redundancies at the Scoresby site has not been confirmed.

It will fulfil any current air-conditioning orders and, beyond closure, will continue to honour ongoing warranty and support obligations for the products so its customers are not affected.

Rheem will maintain the heat pump segment of the Accent Air business for the pool and water heating markets.

Sexton said while Rheem’s water heater business is under “similar pressures” to Accent Air, it is in “a much stronger position to remain a local manufacturer”.

Rheem currently employs more than 1000 people in its Australian operations, and over the next three years it is planning to invest around $60 million in further automation of its Australian manufacturing operations.

A Rheem spokesperson told SmartCompany the funding was only available for clean energy programs: “Rheem is using its grant for clean energy programs and to reduce emissions, not to close factories and cut jobs.”