ABC Technologies is closing a plant in Poland next year because of "dramatic" increased costs for utilities, freight, material and labor.
The company is working with its customers to relocate production from the Koninko, Poland, plant, which it expects will take until the fourth quarter of 2023, it said in its quarterly report Nov. 11.
ABC Technologies declined to comment on the closure or the number of employees affected by it in response to inquiry by Plastics News.
The company recorded a write down of the plant's tooling inventories of $2 million over July, August and September of 2022 and an impairment charge relating to property, plant and equipment of $8.2 million, the report said.
ABC doesn't expect additional, significant impairment charges, "although charges for severance and other estimated closure costs will be recorded" in the second quarter of 2023, it said.
"The conflict between Russia and Ukraine … introduced higher levels of inflation for costs," the report said.
COVID-19 had a "direct effect on operations," in 2022, with outbreaks of the virus in major semiconductor manufacturing countries, like Malaysia, creating temporary shutdowns of the manufacturing sector in those countries, it said.
"The lost production exacerbated the shortage of semiconductors, leading to increased shutdowns by nearly all OEMs," the report said. "These shutdowns, frequently with very short notice, resulted in inefficiencies at the company's production facilities.
"We saw meaningful year-over-year improvement in our financial performance this quarter, driven by strong top-line growth supported by acquisition contribution, along with management efforts to improve operating performance and reduce costs," Terry Campbell, president and CEO of ABC Technologies, said in the report. "Looking ahead, our team continues to navigate lingering economic headwinds while building a more resilient business."
The Toronto-based company hopes its new business model will "help improve efficiency at our plants while reducing complexity both within the organization and for our customers," Campbell added.
"We are committed to optimizing our cost structure, successfully completing our customer cost recovery negotiations, and converting top-line growth to sustained bottom-line performance. There is a lot of work ahead of us, but our team continues to be excited about tackling these challenges head on," he said.
ABC Technologies is the No. 15 largest North American blow molder, according to Plastics News data, with sales in the region of $370 million.