Lamson & Sessions Co. will close its PVC extrusion plant in Pasadena, Texas, by early 2005, as it seeks to improve utilization rates that have hovered in the high 60 percent range for more than a year.
The move, which the Beachwood, Ohio-based pipe maker announced Feb. 20, will affect about 50 workers. Lamson acquired the 52,000-square-foot site in 1986.
``We've been evaluating our capacity for a while,'' said James Abel, executive vice president and chief financial officer. ``Really, we need to be up around 80 percent to be profitable.''
That site houses six extrusion lines. One will be shifted to Oklahoma City; the others will be moved to an injection molding site in Clinton, Iowa. Abel said the lines are specialty lines, not for standard PVC extrusion, which is why Lamson is not selling them.
``We want to make sure we're not relocating lines during the peak season,'' Abel said.
Lamson began to ease its reliance on the Pasadena site last year, when it ceased compounding operations that fed extrusion plants in Woodland, Calif., and Nazareth, Pa. Lamson instead equipped those sites with their own compounding operations. Lamson also operates extrusion sites in Mount Grove, Mo.; High Springs, Fla.; Erie, Pa.; and Tennille, Ga.
Officials hinted at changes during a Feb. 19 conference call reporting 2003 results. The firm's PVC pipe segment suffered a $6 million operating loss for the year, compared with a $1 million loss in 2002, according to Cliff Walsh, an analyst with Sidoti & Co. LLC in New York.
During that call, Abel said the firm is ``looking at all the different options we might have to mitigate those losses.''
Abel said the firm remains committed to the business. Although Lamson tried to sell the PVC pipe business to PW Eagle Inc. in 1999, a sale now would be a last resort. Officials also talked about focusing on different markets.
``The pipe business pulls a lot of these other, higher-margin products along with it. So we have felt that maintaining these together is important; it's easier for our customers and it's been a desired position to have had in our industry,'' Abel said.