Modine Manufacturing Co. said Thursday it will close two U.S. plants and build another in Mexico, and also said it will soon unveil a new business relationship that will result in "significant" new business to the company beginning in fiscal 2009.
Modine, which designs and develops heating and cooling systems for the automotive, truck, electronics cooling, and industrial markets, said it will close its Richland, SC, plant by consolidating production into its facility in McHenry, Ill. The company also plans to close its Clinton, Tenn., facility on the expected phase out of certain Chrysler programs over the 2007-2009 periods.
Modine said it will announce details of the new deal to provide components to a "major global manufacturing company" within the current quarter. As a result of the new relationship, the company will build a new facility adjacent to its current Nuevo Laredo, Mexico, facility. In addition, this new facility will serve as a critical element in the company's business growth strategy with other customer projects.
"Today's announcements, while difficult for those employees affected by our repositioning actions, validate that our plan to win more business by being a financially strong, cost competitive technology leader in our markets is working," said David B. Rayburn, Modine's President and Chief Executive Officer. "Our moves to consolidate production in the U.S. will better utilize capacity and improve our fixed cost absorption. Expanding our facilities in Nuevo Laredo, Mexico, to service our new business and that of our current customers goes far to support their needs for high performance, high technology components and systems in a cost competitive manner."
The announcement will result in the company recording approximately $8.0 million in pre-tax charges over the closure period, consisting of $2.5 million of employee-related costs (subject to union decision bargaining), $1.5 million of asset related costs and $4 million of other related costs. The actions should be completed by the end of the company's 2008 fiscal year. Cash-related expenditures for the moves will be approximately $7.0 million.
