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Ethan Allen to consolidate plants, cut 320 jobs

CEO says moves will help company stay competitive

Thomas Russell -- Furniture Today, June 25, 2009

DANBURY, Conn. — Ethan Allen announced Wednesday that it will consolidate operations of two case goods facilities, a move that will eliminate 320 jobs.

The company is consolidating its Andover, Maine, sawmill and dimension mill into its Beecher Falls, Vt., sawmill and dimension operations. It also is consolidating its machining, assembly and finishing operations at its Beecher Falls into its Orleans, Vt., plant.

The move will result in the elimination of 60 jobs at Andover and 260 at Beecher Falls.

The remaining operations at both Beecher Falls and Orleans will employ more than 325 workers, the company said.

David Callen, vice president of finance and treasurer for the full-line manufacturer and retailer, said that for several months, all three plants had been operating at reduced schedules. The consolidation will allow the remaining facilities to operate at a more normal schedule.

"That is very difficult on the associates," he said. "We held off for as long as was prudent. We felt this was the right action to take and one that will get everybody working on a more normal schedule."

The move does not affect the company's case goods plant in Old Fort, N.C.

Company Chairman and CEO Farooq Kathwari said he regretted the effect the realignment is having on the Andover and Beecher Falls workers. But he said the move will help the company remain competitive as a domestic producer.

"While the severe recession has resulted in many challenges, it has also accelerated our process of reinvention," Kathwari said in a statement. "We have one of the largest U.S.-based home furnishings manufacturing operations, which we are committed to maintaining. Currently about 65% of our products are made in the U.S. This realignment provides us an opportunity to maintain a competitive advantage from manufacturing in the U.S."

The moves will result in a pre-tax restructuring, impairment, severance and other related charges of $12.9 million to $13.5 million, the company said. Most of the charges will be non-cash in nature, and after taxes will amount to $8.2 million to $8.6 million, or 28 to 30 cents per share. Most will be recorded in the fiscal fourth quarter, ending June 30.

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