Home Products International Inc. will close its Leominster, Mass., injection molding plant to help cut costs.
The Chicago firm said Dec. 20 that it plans to shut the facility in the first quarter. HPI acquired the plant, its oldest, in 1996 as part of its purchase of Tamor Plastics Corp.
HPI will relocate some of Leominster's 18 presses and auction off older models, said Chairman and Chief Executive Officer James Tennant. Molding work done in Leominster will be taken up at HPI plants in Chicago and Eagan, Minn., he said.
HPI also announced Dec. 20 that it plans to cut staff elsewhere as part of an ongoing cost-trimming program, but Tennant declined to provide details. Shutting the Leominster operation and reducing staff levels will save $5 million to $8 million a year, HPI estimated. The company will take a pretax charge exceeding $20 million to account for the restructuring. Half of the charge will be noncash asset write-downs.
Tennant said a major reason HPI chose to close the Leominster plant was the uncertain future of retailer Bradlees Inc., the facility's second-largest customer. Braintree, Mass.-based Bradlees is in financial difficulties, and announced in December that it would close all its stores.
Ames Department Stores Inc., the Leominster plant's biggest customer, can be served efficiently from HPI's other locations, according to Tennant. The 45-year-old Leominster plant molds storage containers and hangers.
Tennant said seasonal shopping is slow this year. Although HPI's housewares are mainly recession-proof, "you still need bodies in the stores" to buy the goods.
HPI plans to pursue other cost-cutting measures in early 2001, but the company does not expect to close any more plants, Tennant said.