Ferro Corp. of Cleveland has announced a major corporate realignment that will result in closing 30 of its 80 plants and eliminating about 1,200 jobs in the next three years.
The company's plastics division, which is focused on polypropylene-based compounds, will see little impact from the newly announced plan. But a Ferro spokesman pointed out ongoing reductions have cut the number of Ferro's plastics operations from 30 to 15 since 1991. The firm sold Eurostar Services SA, its primary European compounding plant, early last year.
Most of the plant closings and lost jobs will occur in Latin America and Europe in the first two years of the plan. The 1,200 reductions represent about 17 percent of the firm's 6,900 employees.
No U.S. plant closings currently are scheduled, said Ferro spokesman Aidan Gormley. Ferro operates plants in 10 states including Ohio, New Jersey and Indiana.
Latin America and Europe are being affected because those areas primarily serve Ferro's coatings, color and ceramics division, which will see the most impact from the realignment, Gormley said.
In a May 13 telephone interview, Hector Ortino, president and chief operating officer, said Ferro ``needs to reduce the complexity in our organization and allow management to concentrate on key targets.''
Company officials said in a prepared statement that the realignment is intended to increase Ferro's gross margins to 28 percent by the end of 1999. Ferro, an international producer of industrial coatings, colors, ceramics, chemicals and plastics, posted gross margins of 25 percent last year.
Declining trade barriers in Latin America played a role in its decision to cut back in that region.
``We don't need a facility in every [Latin American] country like we used to,'' Gormley said. ``Now we can have a plant in Argentina and serve the entire region.''
Ferro, which posted sales of $1.4 billion last year, expects to gain $30 million in operating profit by the end of the three-year plan. The plants scheduled to be closed cost $15 million a year in capital expenditures. The net cash cost of the plan is about $38 million.
The company also will take a $100 million after-tax charge in the second quarter for costs associated with the realignment.
All of Ferro's major business lines will remain intact, with the remaining plants handling the existing customer base.