Kohler Co. will shut down engine production in the Village of Kohler and move the work to Hattiesburg, Mississippi.  

With the decision, 325 positions in Wisconsin will be eliminated, but all affected employees will be offered alternative jobs here, a company spokesman said Wednesday.

About 280 production jobs and 45 administrative positions will be cut, the spokesman said.

Kohler has had an engine-manufacturing operation in Hattiesburg since 1998, and also makes engines at its sprawling factory in the Village of Kohler — best known for producing bathroom fixtures. Consolidating the engine work in Mississippi "will create a simplified customer experience and is not about reducing headcount or downsizing the business," the company said in a statement.

"We remain fully committed to our headquarters in Wisconsin, where we are continuing to invest in our facilities and actively recruiting for a wide range of roles,” the firm said.

Kohler now employs 350 people at its Hattiesburg plant. The company plans to add to that operation by leasing 300,000 square feet in an industrial park, hiring 250 people over the next two years and investing more than $15 million. 

Mississippi Development Authority spokeswoman Tammy Craft said state and local governments could offer Kohler more than $18.5 million in tax breaks and subsidies.

Among the subsidies would be up to $4.5 million in rebates on worker income taxes. New Mississippi workers are projected to make $45,000 a year, on average. That’s enough to qualify the company for the rebates.

Tim Tayloe, president of United Auto Workers Local 833, which represents Kohler production employees in Sheboygan County, said current workers in Hattiesburg make about $16 an hour. Engine division production workers in Sheboygan County average $26 or $27 an hour, he said.

Some Kohler engines power the generators the company makes, while other engines go into such products as snowblowers, lawn mowers and wood splitters, Tayloe said.

He said one of the two Sheboygan County engine production lines is expected to be shut down in September and the other by year’s end. A company spokesman said assembly would be phased out in Sheboygan County by the end of 2019, but that machining would remain throughout 2020.

Kohler and Local 833 reached agreement last September on consolidating engine manufacturing in Mississippi, the company said. That agreement included the firm's pledge to offer alternative jobs to all affected employees, both union and non-union, a spokesman said.

As Tayloe described it, the company went into the talks intending to carry out the move of the engine production to Hattiesburg.

“We tried to see what we could do to keep them here, but they had their mind set,” he said.

Production workers in the division got a $1-an-hour raise as an inducement to remain, and those who stick it out until the engine division shuts down will retroactively receive another $1.50 an hour, Tayloe said.

He said many workers already have transferred to Kohler's generator division, which has a plant just north of Sheboygan.

“Nobody will lose their jobs,” Tayloe said of the factory workers. “They’ll fill in as time goes. Right now generator is adding so many jobs.”

Kohler has 2,064 active UAW-represented employees, with none on layoff, Tayloe said.

“And we’re growing every day,” he said.

All told, Kohler has about 6,000 full-time and 1,900 part-time employees in Wisconsin — the vast majority of them in Sheboygan County, a spokesman said.

Tayloe said that while Kohler is doing well, the decision to close the Wisconsin engine operation is depressing.

“When they said they were closing it down, it was like, you’ve got to be kidding me, because we just came off of one of the best years we ever had,” he said.

At the same time the Hattiesburg deal was announced, local government officials agreed to settle a lawsuit by Kohler alleging the company had been forced to pay too much in property taxes. Forrest County attorney David Miller said the city and county agreed to refund about $1.25 million to Kohler in coming years as an additional tax credit on top of the incentives negotiated in the new deal.

Just last December, Kohler production workers in Sheboygan County approved a new, five-year labor contract that will largely erase the much-disliked “two-tier” wage system that pays new hires less than established employees.