Commercial Vehicle Group, Inc. (the “Company”) (Nasdaq: CVGI), a leading supplier of fully integrated system solutions for the global commercial vehicle market, announced this week the closure of three North American facilities in connection with the cost reduction and restructuring plan previously announced on November 19, 2015. At the time, the Company estimated pre-tax costs of $12 to $19 million, which is now lowered to $10 to $14 million. When fully implemented by the end 2017, the cost reduction and restructuring plan previously announced on November 19, 2015 is expected to lower annualized operating costs by $8 to $12 million.
The affected facilities include plants located in Monona, Iowa; and Shadyside, Ohio; along with administrative offices in Wixom, Michigan.
The Monona facility manufactures wire harnesses and has approximately 146 employees. The work performed at the Monona facility will be transferred to the Company’s operations in Agua Prieta, Mexico. A small group of administrative and sales professionals will remain in the Iowa market following the closure of the Monona facility which is expected to be substantially completed by March 31, 2017.
The Shadyside facility performs assembly and stamping activities and has approximately 172 employees. The activities performed at the Shadyside facility will be transferred to alternative facilities or sourced to local suppliers. The closure of the Shadyside facility is expected to be substantially completed by June 30, 2017.
The Company will also close its administrative office in Wixom, Michigan, when the lease expires in the third quarter of this year, as an outcome of its ongoing efforts to consolidate engineering services.
The Company plans to petition for assistance for eligible employees under the Department of Labor Trade Adjustment Assistance Program (TAA).
“Decisions regarding facility closures are extremely difficult but ultimately this restructuring plan reflects our ongoing efforts to align our manufacturing footprint with our customers and supply base in response to changing global macroeconomic conditions and the state of our end markets,” said Joseph Saoud, President of Global Construction, Agriculture, & Military Markets. “Our employees are important to us and we will provide support for impacted personnel, however we must strategically manage our overhead and competitive cost position in response to market conditions and customer expectations.”
Dale McKillop, Senior Vice President and Managing Director of Trim & Structures said, “We understand the impact this decision will have on our employees and the communities of Monona and Shadyside where we have served as a long time employer. Ultimately, we made the best decision we could to maximize our global capacity utilization in response to changing customer needs.”
“We will provide assistance to our employees, including severance benefits, and hope that many of them will consider opportunities with CVG in other markets,” added McKillop.
