Cherokee International Corp., a power supplies manufacturer, will be closing its manufacturing operation in Guadalajara, Mexico by the first quarter of 2007 and is moving those production operations to a new facility in Shanghai, China.
The Guadalajara plant, in operation since 1988, recently employed about 250 full time and temporary employees to produce power supplies. Cherokee owns the building and is seeking a buyer for the 35,000-square-foot property.
In February 2006, Cherokee opened a new, 120,000-square-foot, state-of-the-art manufacturing facility in Shanghai, China. As part of Cherokee's China strategy, they are moving and consolidating, into the new facility, high-volume, low-mix manufacturing from plants that are a higher cost basis to operate.
The design and location of Cherokee's new Shanghai facility optimizes their and their customers' supply chains as an increasing number of Cherokee's customers and suppliers have their own manufacturing operations in China. It also positions the Company to take advantage of the overall business growth in Asia.
Cherokee expects annual recurring savings of approximately $1,700,000 to $2,200,000, plus the value of the facility once it is sold. Cherokee also expects restructuring costs of approximately $900,000 to $1,400,000 to be incurred over the third and fourth quarters.