NEW HAVEN, CT -- Proliance International announced it was initiating further actions under the $10 million to $14 million restructuring program associated with the merger in which Modine Manufacturing Co.'s aftermarket business was merged into Transpro to create Proliance.
Under these actions, Proliance will close its distribution centers in Orlando, FL, and Kansas City, MO, and consolidate these activities into two existing facilities in Arlington, TX, and Southaven, MS. In addition, the company will be consolidating the portion of its copper/brass radiator production, currently performed at its Nuevo Laredo, Mexico, facility, into its Mexico City plant location, which was acquired in the aftermarket business merger. The company also announced that it would be closing its copper/brass tube mill operation located in New Haven, CT.
The company expects the closings in Kansas City and Orlando and the associated relocation actions to be completed by the end of 2005. The relocation of the Nuevo Laredo copper/brass radiator production to Mexico City is expected to be completed during the fourth calendar quarter of 2005. When this action is completed, the company will have centralized its copper/brass radiator production in Mexico City and its aluminum radiator production in Nuevo Laredo.
In conjunction with these actions, the company expects to incur between $600,000 and $800,000 in one-time cash restructuring costs related to the relocation of inventory, facility exit costs and personnel-related expenses associated with the elimination of 36 employment positions from the distribution center consolidations in Orlando and Kansas City. The majority of these costs will be accrued on the opening acquisition balance sheet, resulting in a reduction of the negative goodwill generated by the transaction, as they relate to the closure of acquired facilities.
Costs associated with the Nuevo Laredo/Mexico City relocation, which are expected to be between $3 million and $3.5 million, will be recorded in the income statement as restructuring expenses. These include cash expenditures to relocate equipment and employee-related costs associated with the elimination of 194 positions, along with the non-cash write-off of certain inventory and the non-cash write-down of fixed assets no longer required to net realizable value. With the relocation of production to Mexico City, the company expects to add 42 associates.
Closure of the copper/brass tube mill operation in New Haven, CT, which will be completed during the fourth quarter of 2005, will result in between $100,000 and $200,000 of cash expenditures associated with the relocation of inventory and machinery and one-time personnel-related expenses associated with the elimination of nine full-time positions. Future copper/brass tube requirements will be purchased from outside vendors.
Upon completion, the above actions are anticipated to result in cost reductions which will exceed the one time restructuring costs incurred.
"The continued restructuring actions we are announcing today will reduce duplication, improve our product cost position and further streamline our business," said Charles Johnson, president and CEO of Proliance. "We do not take lightly these decisions to close locations and reduce our number of associates. These were difficult decisions in that context, as there are many long-serviced associates working in Kansas City, Orlando, Nuevo Laredo and New Haven who will be affected by these actions. However, in today's competitive environment, we must strive to achieve the lowest possible cost of doing business, while continuing to provide superior customer service. I thank them for their hard work and many years of service, and assure them that we will act in-concert with our strategic values in the treatment of their separation from Proliance."
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