Belden CDT Inc. is closing its Montrose cable operation in Auburn, MA.
The move is part of the company's further steps in its facilities rationalization plan, which is part of a program to achieve $25 million in annual net savings from the merger between Belden Inc. and Cable Design Technologies Corp. through which Belden CDT was formed in July 2004.
"With today's announcements, we are pruning some low-return product lines, focusing on fewer manufacturing facilities to raise our utilization, and taking initial steps to capture the synergies in selling, general and administrative expense," says C. Baker Cunningham, president and CEO of Belden CDT Inc. "We are on track to fully achieve our stated synergy goals by mid-2006, as planned.""
The company says it plans to close its Montrose cable operation in Auburn, MA. Montrose's principal business is coaxial and twisted-pair cable products for the telecommunications industry, including central office cables. Montrose, which employs about 100 people, has faced declining demand in recent years. Select equipment and products will be transferred to other Belden CDT manufacturing locations beginning in December, and the company expects the plant to be closed by early 2005.
The company also says it plans to close a small subsidiary, Barcel, located in Irvine, California. Barcel supplies high-performance cable to the aerospace industry. Its business will be folded into Thermax and other Belden CDT operations. Barcel employs 12 people. Other company operations at the Irvine location will continue, the company says.
The company is in discussion with employee representatives regarding its intention to close the plant in Skelmersdale, Lancashire, England. The Skelmersdale plant, one of the company's two plants in Lancashire operating under the name Raydex, manufactures twisted-pair and coaxial cables for data networking, telecommunications, and broadcast applications, including high-temperature and zero-halogen applications. Some of the production will be transferred to other European locations of Belden CDT. The Skelmersdale plant employs about 220 people.
In addition, Belden CDT expects to exit the production of some lower margin products in its Netherlands plant and to realign certain manufacturing operations elsewhere. These actions will result in a further reduction of 150 to 200 manufacturing-related jobs during the next several quarters. Belden CDT has taken actions that will reduce its salaried workforce by about 30 people. These actions include:
* Completion of the closing of the headquarters office in Schaumburg, IL,
* A recent reduction of the salaried work force in Richmond, IN, the headquarters of its Electronics Division,
* Consolidation of the company's sales offices in Asia and moving a small distribution center from Hong Kong to Shanghai.
The company expects that the cash costs of the actions announced today and those announced earlier this quarter will be approximately $22 million. The cash costs will be significantly offset by the proceeds from liquidating the working capital and disposing of the fixed assets of these facilities.
The company's earnings for the quarter ending Sept. 30, 2004 will be affected by a charge of about $11.5 million after tax. The charge to earnings is less than the cash cost because actions related to the facilities and personnel formerly with CDT are encompassed in the purchase accounting for the merger, while those actions related to former facilities and personnel of Belden must be included in the charge.
"The operations that we are closing have revenue of about $60 million per year," says Cunningham. "We were losing money on some of these products, so we don't anticipate retaining all of the revenue. By discontinuing losing products and shifting profitable products to other facilities, we expect to increase the utilization of our remaining plants, increase our earnings, and increase our profit margins as a percentage of sales."
Belden CDT is based in St. Louis, MO. For more information visit www.belden.com.
