PGI to close North Little Rock plant
Leading nonwovens manufacturer Polymer Group (PGI) is to close its US plant in North Little Rock, Arkansas, and consolidate certain manufacturing operations in its Benson, North Carolina, plant.
The move is necessary to maintain competitiveness in response to major global downturns in industrial markets, the company says. It plans to phase out operations at North Little Rock by the end of March 2010 and relocate portions of its hydroentanglement and fusible fibre businesses to increase efficiency, reduce costs and maintain quality levels. These activities will involve upgrading the capabilities of both the hydroentanglement and fusible fibre manufacturing bases at PGI in order to meet developing market needs, through capitalisation of in-house intellectual properties.
“PGI’s focus on leading market positions and global growth requires a constant assessment of our capabilities compared to the market needs,” said CEO Ronee Hagen. “As certain market segments for carded technologies increasingly become commoditised or transition to more cost-effective technologies, we must constantly streamline business operations and enhance our capabilities to maintain competitiveness. As a result of these activities, we will be upgrading our overall asset base to better meet market needs.
“Despite efforts to continually improve operations at the North Little Rock plant, the current level and mix of business and future outlook do not support the cost structure of multiple facilities serving these markets. We regret the impact this action will have on employees, but it is a necessary step to maintain our competitive position and effectively serve the needs of our global customer base.”
The North Little Rock plant was built and opened in 1956 and became part of PGI in 1995 when the company acquired the Chicopee business from Johnson & Johnson. After the consolidation is complete, PGI will continue to operate seven plants in the US.
The company estimates that it will recognise cash restructuring charges of approximately $10-11 million through to the first quarter of fiscal 2010, primarily associated with employee termination expenses and costs to move and upgrade equipment. The company also currently expects to recognise a non-cash impairment charge during the second quarter of 2009 of approximately $1-2 million associated with the consolidation and closure. When fully implemented, the consolidation is expected to result in reduced annual manufacturing costs of approximately $10-11.0 million, partially offset by $3-4 million of lower contributions from the exited businesses.
