Belden CDT Inc. on June 5 announced plans to establish a new manufacturing facility near Nogales, Mexico, and to close two of its cable manufacturing plants in the United States by the end of 2007.
The company will begin phasing out production during the third quarter of 2006 at its Tompkinsville, Ky., and Fort Mill, S.C., plants. The Tompkinsville plant manufactures coaxial cable; the Fort Mill plant manufactures twisted-pair data cable. Employment will be reduced at both plants beginning in the third quarter of 2006 and continuing until the plants are closed in late 2007. The Company plans to outsource a portion of the production and move the majority of the production to the new facility in Nogales.
"We need a lower-cost source for the products currently manufactured in Tompkinsville and Fort Mill in order for them to be more cost-competitive and to meet our profitability objectives," said John Stroup, president and chief executive officer. "Establishing additional capacity in Mexico is an important step in our overall plan to increase our manufacturing presence in low-cost regions near our major markets."
As a result of the planned closings, the company expects to recognize asset impairment charges and accelerated depreciation in the second quarter of up to $2 million. In addition, the company expects to record severance charges related to the closures totaling $3.6 million over several quarters, beginning in the third quarter of 2006 and continuing through 2007. There are 200 and 115 associates currently employed at Tompkinsville and Fort Mill, respectively.
"We expect our capital investment in the new facility will be approximately $30 million, and we plan to have it operating in the third quarter of 2007," said Stroup. The new Nogales plant will be the company's third manufacturing location in Mexico. The company operates two manufacturing sites in Mexico today, one in Nogales and one in Tijuana. When completed, these changes among our North American manufacturing facilities are expected to contribute savings of approximately $12 million per year, beginning late in 2007."
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