updated: 4/3/2008 2:34:33 PM
Wisconsin-based Modine Manufacturing Co. (NYSE: MOD) is closing its plant in Logansport. It's part of a restructuring plant that will also mean the closings of facilities in Missouri and Ohio. The closures will take place over an 18-to-24 month period. Production will be consolidated at other North American facilities. Modine makes automobile air-conditioning, ventilating and heating systems.
Source: Inside INdiana Business
RACINE, Wis - April 3, 2008--Modine Manufacturing Company (NYSE:MOD), a diversified global leader in thermal management technology and solutions, announced today the intended closure of three North American plants as part of a restructuring program that will realign its manufacturing operations, improve profitability and strengthen global competitiveness.
Scheduled for closing are Modine's plants in Camdenton, Missouri; Pemberville, Ohio; and Logansport, Indiana. Modine will be discussing these planned closures with the appropriate labor unions at Pemberville and Logansport. Also, on February 4, as part of its global manufacturing realignment, Modine announced the intended closure of its facility in Tubingen, Germany.
The closures will take place over an 18- to 24-month period, with production to be consolidated primarily to other Modine North American facilities and align with Modine's overall global positioning, competitiveness and organizational initiatives introduced in 2006. Along with the closures, focused initiatives are underway supporting product rationalization and price realization to improve profitability globally.
"The decision to close these plants was extremely difficult and was made only after a thorough evaluation of our global manufacturing capabilities, our business portfolio and our competitive position in the markets we serve," said Thomas A. Burke, Modine's President and Chief Executive Officer. "We believe the restructuring will allow us to achieve the scale we need in our manufacturing operations and create a more improved cost structure than exists today. As a result of our global restructuring plan, we expect to achieve $20 to $25 million in annualized savings. At the same time, we remain focused on treating the affected employees with respect and fairness, ensuring a seamless flow of leading-edge thermal solutions to our customers and maintaining our commitment to provide value for our shareholders."
Modine announced the restructuring plan in early February as part of its third quarter fiscal 2008 operating results. Although Modine benefited from broad geographic diversification - with strong sales volumes outside North America and within its Commercial Products Group - results were offset by continued unfavorable operating results in the Original Equipment - North America segment. Those results were due, in large part, to operating inefficiencies and the slower-than-anticipated recovery in the North American truck market. In addition to manufacturing realignment, key elements of Modine's restructuring plan include an evaluation and rationalization of its product and business portfolio, greater discipline in capital allocation, price realization and continued emphasis on reducing selling, general and administrative (SG&A) costs. The company has an overall goal of achieving gross profit margins of 18 to 20 percent.
"We believe the actions we announced today are necessary to ensure our long-term competitiveness in today's global markets, under difficult economic conditions," said James R. Rulseh, Modine Regional Vice President - Americas. "It is clear that we are not alone in our efforts to transition our business from a regionally based component supplier to a more global provider of technology-focused solutions. Many of our peers and competitors - facing similar competitive challenges - have undertaken programs to rethink their global operations, rationalize production and make adjustments to improve operating performance."
Rulseh said that Modine has "great respect for the employees who work in these plants and the contributions they have made to providing quality products and services for our customers. These actions will allow us to achieve greater economies of scale at our remaining plants, optimize our investments and improve asset utilization, which will make our businesses more competitive over the long term."
The Camdenton plant makes oil coolers, charge-air coolers and cooling packages; the Pemberville plant manufactures heavy-duty bolted-tank copper/brass radiators; and the Logansport plant produces steel oil coolers. Modine will assist the approximately 663 affected employees throughout this transitional period, including developing severance packages for eligible employees. Because the plants are scheduled to be closed over an 18- to 24-month period, employment will be reduced in such a way as to leave a small group of employees to close down each facility. In the meantime, production will continue uninterrupted until the consolidation process begins and work moves to other locations across Modine.
Founded in 1916, with fiscal 2007 revenues from continuing operations of $1.7 billion, Modine specializes in thermal management systems and components, bringing highly engineered heating and cooling technology and solutions to diversified global markets. Modine products are used in light, medium and heavy-duty vehicles, HVAC (heating, ventilation and air conditioning) equipment, industrial equipment, refrigeration systems and fuel cells. Based in Racine, Wisconsin, the company has approximately 8,100 employees in 15 countries. For information about Modine, visit www.modine.com.
Source: Modine Manufacturing Co.