Culp will close 2 of 3 remaining U.S. upholstery fabric plants
Will shift production to S.C., China plants
Susan M. Andrews -- Furniture Today, December 15, 2006
HIGH POINT — Fabric supplier Culp Inc. said Thursday it will close two of its three remaining domestic upholstery fabric plants and eliminate 185 jobs in a move to improve the profitability of the upholstery division.
Culp will close its Graham, N.C., weave plant, shifting production to its plants in Anderson, S.C., and Shanghai, China, and a small portion to contract weavers. In addition, the company’s yarn plant in Lincolnton, N.C., will be shuttered and those yarns will be outsourced.
When the transition is complete by the end of April, the Anderson plant will be Culp’s only domestic upholstery fabric plant, with about 150 employees and a book value of about $1.5 million in property and equipment.
The company also operates a distribution center in Burlington, N.C., and its ticking division, Culp Home Fashions, has plants in Stokesdale, N.C., and in Canada.
Rob Culp, chairman and CEO, said the lower sales volumes at the U.S. plants were hurting profits.
“By further consolidating our U.S. manufacturing operations and utilizing lower-cost manufacturing alternatives, we are reducing our operating costs and improving our domestic capacity utilization,” he said. “We have been highly successful with our China platform and continue to be encouraged by the progress we are making in selling non-U.S. produced products.”
China accounted for 58% of Culp’s upholstery fabric sales in the second fiscal quarter ended Oct. 29, up from 29% in the same quarter a year earlier.
“We believe the Anderson plant continues to be the low-cost U.S. producer for velvet fabrics and we are pleased with the trends in customer placements of new product introductions. We also have capacity in Anderson to absorb some of the decorative fabric production from Graham and we believe this plant will continue to be an important element of our overall upholstery fabrics business,” Culp said.
Ken Ludwig, senior vice president of human resources, said that employees at both the plants qualify for federal Trade Adjustment Assistance benefits.
Culp expressed deep regret for “the impact these actions will have on the people and communities involved.”
The company expects to take restructuring charges in connection with the closures of $7.3 million ($5.8 million after taxes), of which $5.4 million is expected to be non-cash items. It expects to take about $4.1 million of the charges ($3.3 million after taxes, or 28 cents per diluted share) in the current quarter.
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