NEW YORK (AP) — A. Schulman Inc. on Thursday said it plans to shutter its Nashville, Tenn. plant and cut about 60 jobs because of the weak economy. Separately, the company also reduced its forecast for the year to account for a settlement and for a change in how it measures inventories.
President and CEO Joseph Gingo said Schulman is consolidating to stay competitive as the economy struggles. The Akron, Ohio company makes plastic compounds and resins used in the auto, packaging and other industries.
"While it's never easy to take such actions, we're seeing uncertainty in the economy and flat demand as we look out into fiscal 2012 and believe these proactive steps are prudent at this time," Gingo said.
The company's stock fell 57 cents, or 3.3 percent, to close Thursday at $16.65. Broader market indexes dropped more than 1.5 percent for the day.
Schulman said it will shut down four production lines at a Nashville plant and eliminate about 60 jobs as part of a strategy to realign its North American Engineered Plastics business. The Nashville facility will be closed by the end of February.
The company will consolidate its remaining U.S. manufacturing business, moving about 24 million pounds of engineered plastics production to two Ohio plants. The company also will spend $7 million to enhance its production capabilities at the Akron facility, creating 20 jobs.
Schulman expects an annual pre-tax benefit after its 2011 fiscal year of about $4 million to $5 million from the changes. The consolidation will result in $8 million to $10 million in charges.
The lower 2011 forecast isn't related to the plant consolidation. Schulman said that because of about $5 million in special charges, it now expects to earn between $50 million and $52 million, for the year, which ends Aug. 31, down from a previous profit forecast of between $57 million and $62 million.
The charges stem from a change in how Schulman measures its inventories and a settlement with a "business relationship."