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PGI plans to phase out North Little operations by end of March 2010

10
Jun '09
Polymer Group Inc announced it will close its North Little Rock, Ark., plant and consolidate certain manufacturing operations in its Benson, N.C., plant to maintain competitiveness in response to major global downturns in industrial markets.

The company plans to phase out operations of its North Little Rock facility by the end of March 2010 and relocate portions of its hydroentanglement and fusible fiber businesses to increase efficiency, reduce costs and maintain its high quality levels. These activities will involve upgrading the capabilities of both the hydroentanglement and fusible fiber manufacturing bases at PGI in order to meet developing market needs through capitalization of in-house intellectual properties.

The company's decision to consolidate businesses was due to a number of factors, including the business need to upgrade process capabilities coupled with lower demand for select industrial products.

"PGI's focus on leading market positions and global growth requires a constant assessment of our capabilities compared to the market needs," said Veronica (Ronee) Hagen, chief executive officer. "As certain market segments for carded technologies increasingly become commoditized 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," she said. "This decision is extremely difficult and we regret the impact this action will have on our 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. It 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 U.S. Other locations include Benson, N.C.; Mooresville, N.C.; Waynesboro, Va.; Kingman, Kan.; Clearfield, Utah; Guntown, Miss., and Clackamas, Ore.

As a result of the decision to consolidate the operations, the company estimates that it will recognize cash restructuring charges of approximately $10.0 million to $11.0 million through 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 recognize a non-cash impairment charge during the second quarter of fiscal 2009 of approximately $1.0 to $2.0 million associated with the consolidation and closure. When fully implemented, the consolidation is expected to result in reduced manufacturing costs of approximately $10.0 million to $11.0 million, partially offset by $3.0 million to $4.0 million of lower contribution from the exited businesses.

Polymer Group Inc


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