Church & Dwight Company Inc. on June 5 announced plans to construct a new integrated laundry detergent manufacturing plant and distribution center in York County, Pennsylvania. Construction will begin in September 2008 and the site is scheduled to be operational by the end of 2009. In conjunction with the opening of the new facility, the company will close its existing laundry detergent manufacturing plant and distribution buildings in North Brunswick, N.J.
Church & Dwight manufactures and markets a wide range of personal care, household and specialty products under the Arm & Hammer brand name and other well-known trademarks.
“Our strategically important fabric care business has grown substantially over the past 10 years, both organically and through acquisitions such as the Orange Glo International Inc. brands acquired in 2006,” said James R. Craigie, chairman and chief executive officer. “This new site will allow us to continue to grow our fabric care business in a facility that can handle the current and anticipated additional base volume growth for our core businesses, support future potential acquisitions and position our business to be among the industry leaders in low-cost production and distribution in the future. Since our fabric care business is our largest business, this initiative will play a key role in helping to drive our long-term goals for revenue growth and gross margin expansion. Specifically, the new site is designed to significantly reduce production and distribution center costs, and is expected to support the company’s annual goal of expanding gross margin by approximately 100 basis points.”
The facility will be located in Jackson Township in York County, Pennsylvania, 100 miles from Philadelphia and will occupy an area of roughly 232 acres with 1.1 million square feet of building space with the ability to expand to meet future business needs. The company has received a great deal of cooperation from local and state officials in the Commonwealth of Pennsylvania on site development, building construction, permits and incentives.
The site design reflects Church & Dwight’s long-standing concern for the environment. The sustainability goals for the facility include a 30 percent reduction in energy consumption, a 50 percent reduction in solid waste and industrial effluent from manufacturing operations, and the use of renewable energy sources for on-site processing needs. After a year-long search, the company chose the York County site for its strategic location and its proximity to major highways and railroads.
The company’s existing North Brunswick complex is comprised of five separate buildings which has created significant inefficiencies and does not allow for expansion to handle expected future growth. The company plans to provide severance and transition benefits to approximately 300 affected employees at North Brunswick, as well as consideration for employment opportunities at other operations of the company.
The company expects to invest approximately $170 million in capital expenditures and transition expenses relating to the opening of the York County site and the closing of the North Brunswick complex. The company intends to finance the project with a combination of cash, debt and an existing line of credit.
The overall project will require charges which are expected to reduce second-half 2008 earnings per share by approximately $0.08 per share and 2009 earnings by approximately $0.24 per share. These charges relate primarily to accelerated depreciation of the North Brunswick complex, severance and other one-time costs associated with the closing of those operations.
Craigie concluded, “We are excited to be constructing this new manufacturing plant and distribution facility which represents the largest capital expenditure in the 165-year history of our great company. This strategic investment will support the continued strong growth of our company. Despite the recent increase in commodity costs, we remain comfortable with our previously announced objective of achieving $2.77 in earnings per share for 2008, before these project charges, and remain confident in our long-term operating model of 3 to 4 percent annual organic growth and 100 basis points of annual gross margin expansion.”
