Polymer Group, Inc. will consolidate operations of one of its European plants to lower its fixed costs and improve overall profitability. The company will close its Neunkirchen, Germany plant and transfer portions of the business to the company’s plant in Cuijk, The Netherlands. Operations at the plant are expected to be phased out by the end of 2007.
“PGI is focused on ensuring we have the right cost structure to effectively compete in each of our markets. Our operation in Germany is not of sufficient size to support a stand-alone site but the business will remain viable when combined with our existing operation in The Netherlands, “ said Veronica Hagen, PGI’s chief executive officer. “While difficult, these actions are necessary to ensure our long-term competitiveness and ability to position our company for further growth and investment in the region.”
After the consolidation is complete, PGI will operate two nonwovens plants in Europe—in Bailleul, France and Cuijk, The Netherlands.
As a result of the decision to consolidate the operations, the company estimates that it will recognize cash restructuring charges of approximately $8-$9 million and the non-cash write-off of certain assets of approximately $3 million. The consolidation efforts, which are expected to be complete by the end of the fiscal 2007, are expected to result in improved profitability and a more efficient manufacturing cost structure. The company expects the profitability of the associated business to improve approximately $3 -$4 million on an annualized basis. Additionally, the Company anticipates proceeds of approximately $6-$8 million, net of closure and exit costs, from the sale of idled facilities and equipment.
In January, PGI announced a similar restructuring of its North American operations, which led to the closure of its Rogers, AR and Gainesville, GA facilities. PGI continues to operate five nonwovens plants in the U.S. in Benson and Mooresville, NC, Landisville, NJ; North Little Rock, AR and Waynesboro, VA.