Perrigo Shuts Holland Montague Plants

June 30, 2006
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ALLEGAN — When the lake-effect snow starts flying and winds start whipping across the fruit fields of western OttawaCounty this winter, southbound U.S. 31 may be choked up with a new batch of commuters. For former employees of Perrigo Co.'s Holland production plant, there will be an extra 25 miles of road between home and work. For those who worked in the plant in Montague, the 90-minutes-each-way trip will be an unfortunate fact of life.

Perrigo announced last week that it will close those two production facilities by the end of the year. Since acquiring Israeli competitor Agis Industries last March, Perrigo "has pursued opportunities to integrate both businesses and to make them as efficient as possible, while at the same time evaluating ways to improve underperforming assets," according to a company statement. Some of the products produced in the Holland and Montague plants will be discontinued, while other profitable products will be produced in facilities in Allegan and the Bronx, N.Y.

Each of the plants scheduled to close employs about 70 individuals. All of the employees will be offered positions at Perrigo's Allegan headquarters.

"We are confident that a good number of our employees from these locations will take the transfers and remain with Perrigo," John T. Hendrickson, general manager of Perrigo's consumer health care division, said in a written statement. "This highly productive, skilled team of employees has performed very well in Holland and Montague. The plant closures are a response to market-driven forces — not a reflection on our employees' efforts."

Perrigo spokesman Ernie Schenk said that the jobs in the Allegan facility will be comparable in compensation and responsibility to those being eliminated in Holland and Montague. Because of the proximity of the Holland plant, Schenk expects that more of those employees will take the transfer offer. In fact, he believes that some of the employees will end up with a shorter commute. For the Montague employees, however, the time and cost associated with the commute — or the need to relocate closer to Allegan — will probably cause some of those workers to seek other employment. Perrigo will offer those workers a severance package.

Closing the plants will result in approximately $11 million in one-time charges. Most of that financial sting will be felt in the fourth quarter of the company's 2006 fiscal year, which ended July 1. The remaining $3 million in restructuring charges will be absorbed in the first quarter of fiscal 2007.

Perrigo owns both of the soon-to-close facilities. There are not any particular redevelopment plans in the works, and the company simply plans to sell the facilities. Schenk did not know how much those sales might yield the company.

The announcement of the plant closings did not have a noticeable impact on the company's share price, which hovered around $16 per share the day of the news.   

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