Maersk Container Industry has announced that it will close its reefer container factory in San Antonio and consolidate production in Qingdao, China.
“After careful review, we concluded that the consolidation of activities at one plant will provide a strengthened capacity utilisation and a simpler cost structure. This will in turn allow us to better serve our customers and focus on innovation responding to the growing demand for reefer container technology,” said Sean Fitzgerald, CEO of Maersk Container Industry (MCI).
San Antonio was designed to build a maximum of 40,000 reefer a year an completed its first commercial orders in 2015. MCI built around 105,000 reefers last year, of which somewhere in the region of 20,000 units were built in Chile, according to data previously published in WorldCargo News.
When MCI built the facility it was swimming against the tide of consolidating container production in larger facilities inside China, but the company believed it would be able to capitalise on the opportunity for lines to lower logistics costs by sourcing reefers from Chile.
Lines reposition over 100,00 empty reefers into Chile, at considerable expense, and sourcing some of there new reefers from Chile created an opportunity to reduce that expense, but MCI was unable to turn local production into a competitive advantage. “In the past several years, the reefer container market has changed fundamentally towards heavy overcapacity. At the same time, it has been challenging for Maersk Container Industry to develop a localised supply chain base of raw materials and key components to support its factory. As a result, manufacturing at the facility has shown not to be competitive in the global markets,” MCI stated.
MCI had invested considerably in training a local workforce in San Antonio, where is was one of the largest employers in the town. “The harsh reality is that to be competitive today requires us to adapt our operations constantly. Fundamental market factors have changed and so must we to grow with the market,” said Fitzgerald. “Regrettably, this decision impacts our 1,209 skilled colleagues in San Antonio and we are committed to supporting them and honouring our obligations.”
The move leaves MCI with headquarters with Research & Development and test facilities in Denmark, and two facilities in China manufacturing reefer and dry containers.