Muller Martini closing plant in my hometown

Muller Martini, a Newport News location of a company that produces printing equipment, will shut down in early 2012. This will result in 160 lost jobs. Muller Martini is a Swiss-based company who opened its first factory in Newport News in 1973. This is a result of a fundamental issue with supply and demand. This factory produces machinery for publishing companies, and the world demand for paper processing materials has been decreasing for many years. The Internet and other forms of media have decreased the need for printed material, and this lack of demand is closing this plant. Because they are closing the plant, we can assume that their level of profits will be leading them beyond the shutdown point. The shutdown point is reached when revenues just cover variable costs. The shutdown point can also be reached when losses are equal to fixed costs. This business has reached the point where they will be losing too much money in the long run and they cannot cover their costs, this is called the critical zero profit level. This firm will have the lowest losses in the long run if they exit the market. The result of this situation is the firm exiting the market. Exiting the market is usually considered a last resort, but for this firm the time has come. This firm has been successful in the area for almost 40 years. 40 years is a relatively long lifespan for a business. In the past, this firm has attempted to rescue itself with previous layoffs of workers. The company laid off 79 workers in may 2009. This unfortunately has not been enough to lower costs of production. The fact that businesses go out of business may be shocking, but it is a fact of the economic system that thousands of businesses enter and exit the market each year. Muller Martini is going to exit the market in three phases. They will layoff workers in three groups. This company will still be operating other factories in other parts of the country, but for the local economic system there will be an impact. They can move the very limited orders to their other facilities and save money by not operating extra manufacturing facilities. These 160 people will have to find alternate employment. The 290,000 square foot manufacturing facilities will be vacant until another firm sets up shop there. We can hope that whatever happens there in the future will help to be a boost to the local economy.

Source: Daily Press

Manufacturing layoffs: Muller Martini will close its Newport News manufacturing plants by Jan. 2012; 160 will lose jobs. - dailypress.com