Update: This story now contains additional information.

MUSKEGON, MI – Employees say kayak manufacturer Hemisphere Design Works is laying off workers and shutting down operations in Muskegon.

Hemisphere Design Works’ Muskegon employees say they were told Tuesday, Oct. 29, they were losing their jobs. Phones were turned off at the company’s headquarters in downtown Muskegon and doors were locked at the Muskegon Lake-front headquarters.

According to a notice of the facility’s closing obtained by Muskegon Chronicle/MLive.com from a Hemisphere employee, the company plans to close its operations at 1790 and 1880 Sun Dolphin Drive in Muskegon, but did not specify when the closure would become permanent.

“Unfortunately, this also means that we must advise you that your employment with the company will end,” according to a copy of the letter. “You should expect your employment with the company to end during the 14 day period between Nov. 18, 2019 and Dec. 5, 2019.

“We will provide you with more specific information as we continue to assess the situation.”

The letter also states that the company had been experiencing “challenging business circumstances” and that Hemisphere had been working to secure additional funding sources.

“Although we anticipated receiving additional capital as we worked through these circumstances, we have now learned that the term lender will not provide additional funding,” the letter reads.

One employee said workers were told Dicks Sporting Goods had canceled a major contract for kayaks, leading to financial troubles and a bank taking control of the company. There have been other layoffs and work slow-downs leading up to Tuesday’s announcement, he said. The employee asked not to be named because for fear of retribution.

Another employee, who also asked not to be named, told MLive that he and his wife were told Tuesday that the company was shutting down operations that day at a Muskegon production facility that employs about 200.

Muskegon City Manager Frank Peterson said city staff also had heard “rumblings” of trouble at Hemisphere.

“We’re not jumping to any conclusions as of yet because we haven’t had direct contact with executive management,” Peterson said. “We have reached out to executive management but haven’t heard back from them.”

A company spokeswoman did not return a phone call.

Hemisphere’s brands include Sundolphin, Evoke, Future Beach and Terrain, according to its website. Those brands include kayaks, canoes, pedal boats, dinghies, paddleboards, fishing boats, hunting blinds and sleds.

Jim Fox was named as Hemisphere’s second CEO in January, replacing Chuck Smith.

Smith oversaw the 2017 merger of Muskegon-based KL Outdoor and Montreal, Canada-based GSC Technologies, to form Hemisphere Design Works, which has been called the world’s largest kayak maker.

The company opened its new downtown Muskegon headquarters during January 2018. Headquarters are located at the former SPX Corporation building, 700 Terrace Point Drive. At that time, the company had 11 facilities in Muskegon.

The move to the new headquarters came with a $765,000 state grant and a subsequent promise from the company to hire 153 people and invest $9.2 million in Muskegon.

The former KL Outdoor was founded in 1982 by Kenneth Harris and has been based in Muskegon since 1989. His sons Tom, Ken, Dan and Dave Harris eventually took over the company, and then sold it to New Water Capital at the end of 2016.

When the merger was announced, former KL Outdoor President Tom Harris told MLive that the move would not result in layoffs at the Muskegon plant.

KL Outdoor had employed about 300 full-time workers, and about 200 part-time workers during its busiest times from January to July.

An investment of $1.4 million in a new building and machinery allowed the KL Outdoor to move warehousing to a facility at 1224 E. Pontaluna Road in Norton Shores, making room for additional manufacturing equipment at its existing factories. Plans were approved by the city of Norton Shores in fall 2016.