Steelcase Cuts Jobs, Plants
GRAND RAPIDS — Steelcase Inc. this morning announced consolidation plans that will cost West Michigan 600 jobs over the next two years, as well as close some of its Grand Rapids manufacturing facilities.
Officials estimate 100 salaried and 500 hourly workers will be affected by the decision, as will 2.6 million square feet of manufacturing space.
The news comes just two days before the office furniture manufacturer is scheduled to release its fourth quarter and fiscal year results. The company expects to incur net pre-tax restructuring charges totaling $25 million to $30 million from these actions over the next two years, with a cash cost of $20 million to $25 million. When the plan is fully implemented, however, the company expects annual pre-tax savings in the range of $35 million to $45 million.
In West Michigan, Steelcase currently manufactures on two “campuses” in Kent County. Over the next two years, the company will consolidate this manufacturing into three Kentwood/Gaines Township plants and close the plants located in the city of Grand Rapids. Additionally, some production will move to other Steelcase plants in North America.
When the consolidation is complete, approximately 600 positions will be eliminated in West Michigan. Additionally, approximately 300 positions will move from the Grand Rapids campus to the Kentwood/Gaines locations and approximately 300 positions will move to other North American manufacturing locations.
“We’ve emerged from difficult economic times a stronger company, determined to continually improve every aspect of our business,” said President and CEO James Hackett when explaining the decision. “These changes reflect our ongoing commitment to build a new and more flexible industrial system that will ensure our competitiveness. We continue to execute our strategy of implementing lean manufacturing, reducing complexity and developing a world-class global supply chain.”
He said the company would explore options to sell or redevelop land and buildings that will no longer be needed in the business. The net book value of the real estate, according to Steelcase, is approximately $30 million to $35 million.
Hackett said the combination of today’s actions and other ongoing projects are essential in helping Steelcase to achieve its previously stated 35 percent long-term gross margin target.