Toledo s nationally famous tableware maker yesterday announced it would close a major California factory to cut costs and is finalizing plans to open a factory in China and to buy one in Europe.
The closing of its Libbey Inc. s City of Industry, Calif., factory by early next year, eliminating 200 jobs, is part of a restructuring that will realign its production capacity to cut costs, the firm said last night.
The factory makes drinking glasses and is one of its five U.S. factories. Besides glasses, Libbey makes dishes and other tableware items, with restaurants among its biggest customers.
While the decision to close this facility was extremely difficult, increasing demands from customers and growing international competitive pressures require us to reduce costs and improve profit margins, said John Meier, chairman and chief executive officer, in a statement.
The result of the shutdown and plans for a new factory in China will make Libbey stronger, more competitive and more profitable, he said.
The Toledo firm, which had a profit of $29 million on sales of $514 million last year, said it is in the final stages of site selection, land acquisition, and obtaining a business license to manufacture drinking glasses in China. Production is to begin in early 2007.
The factory is to serve the growing Chinese and Asian-Pacific market, and some other unnamed export markets, the company said.
Libbey also said it is negotiating to purchase a glass tableware factory in Europe, though it did not say where. If finalized by late this year as expected, it would be part of the firm s Royal Leerdam subsidiary in the Netherlands, the Toledo company said.
The California plant closing will result in pretax charges of $24 million to $27 million this year and next, primarily from the closing costs such as severance and asset write-downs, the company said.
Per-share earnings this year will be hurt by the charges, with 2004 profit now estimated at 14 to 36 cents a share, down from a Reuters analyst consensus of $1.83 a share before the restructuring.
Libbey, which has a Toledo plant, said production would be shipped to its other factories and would result in annualized savings of 54 to 64 cents per share. It said the net job loss would be about 140, or 3.7 percent of its global work force.
The company had logged a first-quarter profit drop this year, compared to the period a year ago, but its sales were up and its second-quarter profit and sales improved.
In its announcement, the firm said it expects its revenues to grow 5 to 6 percent in the third quarter and 3 to 4 percent in the fourth quarter, compared to the same periods a year earlier. That should result in annual sales of $542 million to $547 million, it said.
Libbey s stock was not affected by the announcement because it came after the market closed. Its stock closed at $22.90.