Spectra Premium Industries Inc. of Boucherville, Que., has announced the imminent closure of its Stratford radiator plant in Ontario and the consolidation of its aluminum radiator manufacturing operations at its Laval plant in Quebec.
Aluminum radiator manufacturing activities at the Stratford plant are expected to cease on November 19, 2004.
The company is a North American manufacturer of automobile, light- truck and heavy-duty truck aftermarket parts, and now also present in the Original Equipment Manufacturer market for steel fuel tanks and high-pressure die cast magnesium alloy parts.
As a result of this consolidation at the Laval plant, initial annual savings before income taxes are estimated at close to $2.5 million and will start having an impact as of the second quarter of fiscal 2005-2006, or more specifically as of May 2005. Once the building in Stratford owned by the Corporation is sold, annual savings are expected to exceed $3 million pre-tax.
Non-recurring expenses of close to $2.0 million before income taxes, related to this consolidation, will be charged to the results of the third quarter for the current fiscal year. This charge mainly results from severance packages, dismantling costs and the transfer of certain equipment from the Stratford plant to the Laval plant, and costs relative to the closure and disposal of the Stratford plant. Subsequently, for a certain period, the corporation expects to continue to operate its warehousing activities at Stratford. The Stratford plant currently employs one hundred people and this number is expected to be reduced to approximately ten people as of November 19, 2004.
This consolidation at the Laval plant will not have an impact on the clientele of Spectra Premium, since this plant is already producing many aluminum radiator models. The aluminum radiator line in the Laval plant has been in production for close to a year now and displays performance indicators and quality standards comparable to those of the Stratford plant. The Corporation also expects to gradually reduce its radiator inventory levels beginning in the fourth quarter of the current fiscal year, which should result in a drop in inventories on this product line of close to $7 million by the second quarter of fiscal 2005-2006.