Universal Closes Five Plants
GRAND RAPIDS — Universal Forest Products today announced the closure and intended sale of five of its facilities and the close of a portion of operations at another facility due to the deterioration of the housing market. The company indicated that the sale of the facilities will help it to better align its manufacturing capacity.
“In a housing market that continues to deteriorate, we must proactively manage our assets and operations, position our company for growth when housing stabilizes and take advantage of opportunities in our three core markets,” explained President and CEO Michael B. Glenn.
To be sold are plants in Stanfield, N.C.; Gulfport, Miss.; Elkhart, Ind.; Westville, Ind.; and Sanford, N.C.; and a portion of operations in Thorndale, Ontario, Canada. According to Universal, those facilities will not be needed once the housing market recovers. Operations from those plants have been consolidated into plants in New London, N.C.; New Waverly, Texas; White Pigeon, Mich.; Granger, Ind.; Bunn, N.C.; and Emlenton, Penn., respectively.
“While these plant closings are difficult, there are tangible long-term benefits,” Glenn said. “We’re taking excess costs and capital out of our operations and establishing a more efficient structure to meet current and future needs.”
The closures are expected to result in pre-tax, non-cash charges of approximately $6.8 million to write down the value of certain property, facilities and equipment. In addition, the company will see severance and other nonrecurring expenses of approximately $2 million. All costs will be recorded in the fourth quarter of 2007.
Sale of the facilities, along with the sale of other excess real estate is expected to generate about $38 million in positive cash flow before taxes this year. Market conditions have also forced Universal to temporarily close eight other operations and consolidate them into existing Universal facilities. Collectively, the closed operations had total estimated pre-tax operating losses of more than $11 million in 2007.
“We’ve worked hard to maintain a solid financial position in the face of a housing downturn that had a devastating impact on so many other companies,” Glenn noted. “Our balance sheet is strong and we continue to generate positive cash flow, which will help fuel our ongoing growth strategy.”