Dorel closing Missouri RTA factory
By Michael J. Knell -- Furniture Today, October 10, 2005
Montreal — Consumer products giant Dorel Inds. will close its Ameriwood ready-to-assemble furniture plant in Wright City, Mo., by Dec. 31 as part of a plan to improve earnings in its home furnishings segment.
Most Wright City production will be shifted to Dorel's other RTA factories in Dowagiac, Mich; Tiffin, Ohio; and Cornwall, Ontario. Some 300 employees will lose their jobs.
President and CEO Martin Schwartz said Dorel is undertaking a "significant consolidation" at Ameriwood Inds., including realigning marketing into four distinct groups, each of which will focus on new designs and materials while aggressively growing its customer base.
Dorel has seen better-than-average growth in its home furnishings division, but the company attributes nearly all of that to Dorel Asia, its relatively new import division.
"Although we remain confident there will be sustained demand for domestically manufactured RTA furniture, we have concluded that our manufacturing footprint exceeded anticipated market needs," Schwartz said. "A combination of North American production with imported components will ensure the long-term viability of our domestic operations."
Ameriwood President Greg Carlson said, "We have mapped the market opportunities and are now implementing an aggressive new product and business development plan. This will be supported by a revised branding strategy to complement the OEM/private-label business with our key accounts."
In addition to RTA brands Ameriwood, Charleswood and Cosco Home & Office, Dorel makes private-label product for key accounts, such as the new Martha Stewart Everyday RTA furniture line for Kmart. A version of the latter is expected to debut at Sears Canada soon.
Carlson said a number of new product categories will be created in the Dorel Home Products/Casual Lifestyle business unit, each with its own director responsible for achieving targeted goals. The categories include storage and organization, living, workspace, entertainment and casual lifestyle.
Storage and organization introductions, which include closets, cabinets and other units for a variety of applications in the home and garage, will be launched under Dorel's California Closet, SystemBuild and Carina brands.
Also under development are new furniture items for living room, bathroom, bedroom and den/family room, including a "bedroom in a box."
Carlson said new desks, workspace systems and products are set under the Belkin, California Closet and Carina labels.
The Belkin line also will see new gaming desks and entertainment units, while TV stands and consoles for plasma, LCD and HDTV sets are under development for several major electronics retailers.
Already a power in futons, Dorel said it will augment these offerings with RTA occasional pieces, as well as what it describes as new "casual/fun seating and accessories."
Carlson said new product will be offered in a variety of materials, including wood/veneer, metal, glass and medium-density fiberboard/veneer.
He said Dorel remains committed to being a North American manufacturer.
The closure of the Wright City plant will result in pretax charges of about $11 million, most of which will be recorded in 2005. About $8 million will be non-cash charges representing the writedown of buildings, equipment and other assets.
Beginning in 2006, the company anticipates the closure will result in savings of some $6 million annually.
In 2005's first half, Dorel's home furnishings segment posted sales of $277.3 million, up 9.3% from the comparable 2004 period, with earnings of $17 million, an increase of 12%.
