Stanley closes N.C. plant, cuts estimate
By Powell Slaughter -- Furniture Today, December 16, 2001
STANLEYTOWN, Va. — Case goods major Stanley Furniture will close its youth bedroom plant in West End, N.C., reducing excess capacity caused by increased imports of components and finished pieces.
"We deeply regret the need to close the West End plant and eliminate these jobs," said Albert Prillaman, Stanley chairman and chief executive officer. "However, we believe this realignment of our manufacturing operations is absolutely essential for Stanley Furniture to remain a highly competitive manufacturer and industry leader."
Stanley also revised its fourth-quarter sales and earnings estimates, predicting a sales decline between 15% and 19% and earnings per share between 26 cents and 31 cents. Previously, the company predicted 59 to 64 cents per share.
Production will be phased out at West End in the first quarter and shifted to plants in Robbinsville and Lexington, N.C. Warehousing and some other activities will continue at the 500,000-plus-square-foot West End facility until midyear. The other two plants will concentrate on cases while items such as bunk beds will be sourced.
Stanley expects to cut operating costs by $4 million to $5 million a year with the closure, and to save $3 million to $4 million in future capital expenditures as it moves machinery and equipment from West End to other plants.
With the West End shutdown, Stanley will trim its work force by 400 jobs or 13%. Including other moves this year, Stanley's total employment after the shutdown will be down 20% from December 2000.
Prillaman said Stanley has increased its sourcing activities in the past two years and will expand further in Asia this year, including its first purchases from The Philippines. He said that while Stanley will bring in more finished product than before, it will continue to proceed cautiously overseas and isn't importing any full suites.
Currently, imported parts and full pieces make up a little over 5% of Stanley's line.
"It's certainly going north of that, but we don't have a specific goal in mind," Prillaman said. "For us it's a style and an item-by-item issue. We don't source anything in its entirety. Where we have sourced complete items, it's part of a group."
Company officials are spending more time in Asia to ensure what Prillaman called a "seamless" integration of sourced product into the line.
"It all comes down to product and the best design for the right price that meets our quality and delivery standards," he said. "When you do the product right, sometimes you source and sometimes you don't."
He said Stanley plans no more domestic plant closures.
"We think we have the balance right, and we still want to have a (domestic) manufacturing value featured, because that's how you differentiate yourself," Prillaman said. "We're not going into this to compete with direct imports. What we end up with is a lot of capacity to grow in both ways."
Stanley will take pretax charges of $7 million to $9 million for asset writedowns and other restructuring, taking $3 million to $4 million in the current quarter and the remainder mostly in the first quarter of 2002.
| Prillaman |
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