OMNOVA Solutions To Idle Decorative Products Facility in Taicang, China
FAIRLAWN, Ohio, Sept. 23, 2011 /PRNewswire/ -- OMNOVA Solutions (NYSE: OMN) today announced that the Company will immediately suspend production at its Taicang, China plant and consolidate production into its Shanghai, China facility, pending future improvement in business conditions. Both facilities make coated fabrics for OMNOVA's Decorative Products business segment. Idling of the Taicang plant is in response to weak demand in the domestic and export furniture and automotive upholstery markets, which has created excess industry capacity in the region.
"By consolidating all coated fabrics manufacturing into our well-established and larger Shanghai facility, OMNOVA will improve our capacity utilization while continuing to provide quality products and timely service to our customers in China," said Kevin McMullen, OMNOVA Solutions' Chairman and Chief Executive Officer. "Since the production processes at both facilities are largely redundant, the transition period will be very brief. Importantly, as the local and export markets regain momentum, our Taicang site remains an attractive option to support future growth."
The Company emphasized that the suspension of production will occur in an orderly fashion, consistent with local labor requirements and appropriate safety and environmental practices.
The idling will affect approximately 95 employees at the Taicang plant. Some employees will have the opportunity to transfer to the Company's Shanghai facility. "We regret that market conditions make it necessary to take this action. We certainly appreciate and want to thank our employees for their hard work and dedicated service to OMNOVA," McMullen said.
Annual sales from products manufactured at the Taicang plant were approximately $8 million. Cash costs to idle the facility are estimated at $0.5 million, which will be incurred during the fourth quarter of 2011. Cost savings from idling the plant are forecasted to be $1.2 million in 2012.
This press release includes "forward-looking statements" as defined by federal securities laws. These statements, as well as any verbal statements by the Company in connection with this press release, are intended to qualify for the protections afforded forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current expectation, judgment, belief, assumption, estimate or forecast about future events, circumstances or results and may address business conditions and prospects, strategy, capital structure, sales, profits, earnings, markets, products, technology, operations, customers, raw materials, financial condition, and accounting policies, among other matters. Words such as, but not limited to, "will," "may," "should," "projects," "forecasts," "seeks," "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "optimistic," "likely," "would," "could," and similar expressions or phrases identify forward-looking statements.
All forward-looking statements involve risks and uncertainties. Many risks and uncertainties are inherent in business generally and the markets in which the Company operates or proposes to operate. Other risks and uncertainties are more specific to the Company's businesses including businesses the Company acquires. The occurrence of such risks and uncertainties and the impact of such occurrences is often not predictable or within the Company's control. Such impacts could adversely affect the Company's results and, in some cases, such effect could be material.
All written and verbal forward-looking statements attributable to the Company or any person acting on the Company's behalf are expressly qualified in their entirety by the risks, uncertainties, and cautionary statements contained herein. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation, and specifically declines any obligation other than that imposed by law, to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Risks and uncertainties that may cause actual results to differ materially from expected results include, among others: economic trends affecting the economy in general and/or the Company's end-use markets; prices and availability of raw materials including styrene, butadiene, vinyl acetate monomer, polyvinyl chloride, acrylonitrile, acrylics and textiles; ability to increase pricing to offset raw material cost increases; product substitution and/or demand destruction due to product technology, performance or cost disadvantages; loss of a significant customer; customer and/or competitor consolidation; customer bankruptcy; ability to successfully develop and commercialize new products; a decrease in demand for domestically manufactured products due to increased foreign competition and off-shoring of production; ability to successfully implement productivity enhancement and cost reduction initiatives; unplanned full or partial suspension of plant operations; losses from the Company's strategic alliance, joint venture, acquisition and integration activities; loss or damage due to acts of war or terrorism, natural disasters or accidents, including fires, floods, explosions and releases of hazardous substances; ability to comply, and cost of compliance with legislative and regulatory changes, including changes impacting environmental, health and safety compliance and changes which may restrict or prohibit certain products and raw materials; rapid inflation in health care costs and assumptions used in determining health care cost estimates; risks associated with foreign operations including political unrest and fluctuations in exchange rates of foreign currencies; prolonged work stoppage resulting from labor disputes with unionized workforce; changes in and compliance with pension plan funding obligations; stock price volatility; infringement or loss of the Company's intellectual property; litigation and claims against the Company related to products, services, contracts, employment, environmental, safety, intellectual property and other matters; adverse litigation judgments or settlements; absence of or inadequacy of insurance coverage for litigation judgments, settlements or other losses; availability of financing at anticipated rates and terms; and loan covenant default arising from substantial debt and leverage and the inability to service that debt, including increases in applicable short-term or long-term borrowing rates.
For further information on risks and uncertainties, see the Company's Form 10-K and 10-Q filings with the Securities and Exchange Commission.
OMNOVA Solutions is a technology-based company with pro forma sales for the twelve months ending May 31, 2011 of $1.2 billion and a global workforce of approximately 2,800. OMNOVA is an innovator of emulsion polymers, specialty chemicals, and decorative and functional surfaces for a variety of commercial, industrial and residential end uses. Visit OMNOVA Solutions on the internet at www.omnova.com.
SOURCE OMNOVA Solutions
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