As a next step in its strategic transformation, PolyOne Corporation (NYSE: POL) today announced that it is realigning certain of its manufacturing assets, primarily in North America.
The decision to realign assets is a result of the Company’s ongoing focus on both the operational excellence and specialization components of its transformation strategy. This realignment is designed to enable the Company to improve the competitiveness of its operations and supply chain across many platforms and businesses, consistent with current and anticipated customer requirements. The impact of these actions will be to enhance the Company’s long-term performance, while helping to mitigate the effects of the current economic downturn and the increases in raw material and energy costs.
Over the next nine months, the Company will close certain production facilities, including seven in North America, and one in the United Kingdom, resulting in a net reduction of approximately 150 positions. Production at the affected facilities, as well as several manufacturing lines, will be moved to a limited number of the Company’s more than 30 remaining plants. PolyOne expects no disruption of service, due to the Company’s focus on improved product delivery systems and inventory management.
“As part of our transformation process, we are committed to driving operational excellence on a global basis, which includes improving service and efficiency throughout our supply chain,” said Thomas J. Kedrowski, senior vice president, operations and supply chain. “After conducting a thorough review of our entire operation, our business teams identified opportunities to further align our capacity and production assets to improve the effectiveness of our global manufacturing footprint. These changes also reflect our focus on specialization, which is shifting our portfolio away from non-value-added commodity applications toward more specialized solutions.”
Stephen D. Newlin, chairman, president and chief executive officer, said, “The recent unprecedented increases in raw material and energy costs, and longer-term fundamental changes in the global economy were critical factors in our decision-making. Declining demand in markets such as housing and automotive has created a timely opportunity to remove excess capacity and address supply chain efficiencies as important steps in mitigating the effects of the current economic conditions on PolyOne and its customers.”
As a result of these actions, PolyOne expects to incur one-time charges of approximately $31 million, of which approximately $18 million are expected to be non-cash. These one-time charges will include costs related to severance and asset write-downs, which will be included in the Company’s financial results over the next three quarters. The Company also expects to invest approximately $12 million in additional capital expenditures at its remaining locations to support these changes. The Company expects these actions to generate pre-tax savings of $17 million ($0.12 per share after tax), on an annualized basis.
Newlin said, “Difficult decisions like these are taken very seriously. After thorough study, it was determined that this capacity reduction is needed to improve our near-term operating efficiency while advancing our longer-term strategic position. We understand the impact of this announcement on affected employees, their families and local communities and are committed to handling these moves with great sensitivity.”
| Kenneth M. Smith Senior Vice President, Chief Information & Human Resources Officer Phon: +1 440-930-1313 ken.smith@polyone.com | Robert M. Patterson Senior Vice President & Chief Financial Officer Phon: +1 440-930-3302 bob.patterson@polyone.com |
