EAST CHICAGO -- After more than 40 years, Union Tank Car Co., a Chicago-based railroad car manufacturer, is shutting down its East Chicago plant. Approximately 445 people, primarily Northwest Indiana residents, will lose their jobs when the plant closes May 30.

"It was a big shock to us," said Kelly Hounshell, president of the Boilermakers Local 524, and Union Tank employee for 21 years. "I didn't believe they would actually close that plant because it's a moneymaker for them," Hounshell said.

East Chicago Mayor George Pabey said he, too, was blindsided by the announcement. Pabey said Union Tank officials informed him of the decision Friday morning. "I'm disappointed with the way it was handled," Pabey said. "They saw this coming for a while, I'm sure. They should have come to me sooner."

Pabey said the city has given Union Tank numerous property tax abatements in recent years, money he may seek to recoup since the company is leaving the city. "I will be meeting with city attorneys to see what our options are in that regard," the mayor said.

Owners include Warren Buffett, whose Berkshire Hathaway purchased 60 percent of Union Tank's parent company, Marmon Holdings, last year.

Hounshell said production output was slashed in half last fall. The company also laid off about 100 employees at the beginning of the year. Now, "a declining market for tank car sales and leases and long-term demands" are forcing the closure of the company's oldest factory, according to a company news release. Union Tank spokesman Bruce Winslow wrote in an e-mail that "the cost of operating an old facility and its physical limitations" were other factors. "It's a tough thing," Winslow said. "It really is."

The company has newer, nonunion production facilities in Texas and Louisiana, prompting Hounshell to speculate the company would move operations there.

Winslow stressed that the company is "reducing production overall, not shifting production."

Union Tank said about 70 salaried employees and 375 hourly employees will be without work. Hounshell said about 340 employees are union.

The company is honoring severance package stipulations signed in December 2005. Hounshell said that includes $700 for every year of service, for employees who have served 10 years or more. Employees with four to 10 years of service will get $500 per year. Those who have worked for less than four years will get nothing, Hounshell said.

Winslow said the company will be in talks with other local businesses about potentially hiring their employees.

Tammy Stump, senior workforce associate for The Center of Workforce Innovations in Valparaiso, said her agency will meet with Union Tank executives next week about offering job-counseling services to employees. Stump said they have been allowed to work with Union Tank employees on site before, answering questions about unemployment and assisting in job searches.

Nevertheless, Union Tank employees are upset and worried. "It's been a backbone of East Chicago," Hounshell said of the plant, which manufactured more than 75,000 tank cars in its history. "You know as well as I do there's not a lot of work in this area."

John Byrne contributed to this report.
Contact Piet Levy at 648-3102 or plevy@post-trib.com