After more than 40 years of operation, A. Schulman Inc.'s plant in Orange, Texas, is closing.
The move - to be completed by Aug. 31 - is part of the Fairlawn, Ohio-based compounder's effort to balance its production capacity with North American market demand, officials said in an April 8 news release. Schulman's U.S. operations have been hampered by higher resin prices, competitive pressure and weak demand for value-added, engineered products.
Closing the 68-employee Orange plant ``was a difficult decision, but absolutely necessary to help us align our North American production capacity and cost structure with the market realities,'' said Schulman President and Chief Executive Officer Terry Haines.
``We invested in this plant over the years, but on balance, there is sufficient capacity at other facilities.''
The 145,000-square-foot plant primarily makes black concentrates and thermoplastic olefins for the U.S. automotive market. The closing is expected to cost Schulman between $6 million and $8 million, but will save the company $5 million annually beginning in its fiscal 2004.
With 60 million pounds of annual capacity, the Orange plant represents about 12 percent of Schulman's North American production.
Earlier this year, Schulman announced plans to reduce its North American inventory levels by 15 percent in a move aimed to produce $6 million to $7 million in annual savings. The firm also cut 11 jobs at its Bellevue, Ohio, plant and announced plans to expand color concentrate production in San Luis Potosí, Mexico.
Sales for the first quarter of fiscal 2003, ended Nov. 30, were up 12 percent to $267 million, with profit up 60 percent to $8.3 million.
On Wall Street, Schulman's per-share stock price was just under $15 in late trading April 8. Its stock had started the year at around $19.
Schulman was North America's third-largest compounder in a recent Plastics News ranking, with a market share estimated at 4-5 percent.