PolyOne Announces Restructuring in Its Elastomers Business
PolyOne Corporation announced that it will close two manufacturing plants within its elastomers and Performance additives business segment as it acts on restructuring initiatives to reduce costs and bring capacity in line with sales demand.
PolyOne's DeForest, Wisconsin, and Wynne, Arkansas, plants are to close around the end of 2003. The Company also plans to reduce the number of sales and administrative positions within the business. These combined moves will translate into the reduction of approximately 230 positions across the business.
"While this business has maintained profitability and positive cash flow, the effects of raw material inflation, offshore competition and geographic movement of some key markets have decreased operating margins," said Thomas A. Waltermire, chairman and chief executive officer. "We are determined to reduce excess production capacity and continue to realign our cost structure in order to improve our profitability."
On October 21, PolyOne announced that Elastomers and Performance Additives was one of three business operations being considered for divestment. The Company has set no deadline for divesting the business. Elastomers and Performance Additives had 2002 sales of $364 million, representing 14 percent of total Company sales.
The DeForest and Wynne plants manufacture a variety of products, including compounded elastomers and dispersed rubber chemicals. PolyOne intends to carefully transition these products to other elastomer manufacturing facilities with excess capacity at Burton, Ohio; Dyersburg, Tennessee; and Kennedale, Texas.
PolyOne projects that this restructuring action in Elastomers and Performance Additives will yield annualized pre-tax earnings improvement of $7.5 million. Total restructuring expense is projected to approximate $15 million, of which approximately $7.5 million will be non-cash and related to asset write-offs. Estimated 2003 fourth-quarter restructuring expense is $11.5 million, with minimal funding of the cash closure costs anticipated in 2003.
Employees affected by the plant closings will be eligible for severance benefits and outplacement services, and will be able to apply for job openings at other locations within the Elastomers business group.
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