The facility, built in 1924, manufactures component parts primarily for the company's infant feeding products and employs approximately 160 people. The production of the majority of these parts in the future will be outsourced to plastic molders with specialized technology, company officials say.
Martin R. Petersen, director of public affairs for Playtex, notes that the company has reached an agreement with a plastic mold operation in Tennessee and will eventually ship necessary equipment and machinery from the Watervliet facility to Tennessee by September of this year.
He adds that the decision to cease operations at the plant, which is in a residential suburb of Troy and Albany, was not made due to cost factors, although the firm reports that the closure will result in a cost savings of $1.5 million beginning in 2003. The savings in 2003 will be offset by $1.5 million in costs relating to the closure of the plant this year.
Petersen says that along with being located in a residential area, the building was extended in 1947 but could not be added onto. "We were land-locked," he says. Other drawbacks of the building's antiquated design were: ceilings that were too low and wood flooring that was not sturdy enough to handle new machinery, he adds.
Commenting on the plant closure, Michael R. Gallagher, chief executive officer of Playtex Products notes, "It is always a very difficult decision to make when any of our employees are impacted. We are committed to help them through the transition period. Unfortunately, the changing demands of the business in terms of technology and capital investment required to deliver innovative products to the market on a cost efficient basis dictated that we consider strategic alternatives. We made this decision only after a thorough evaluation and have a detailed plan in place to ensure that there is no disruption in our ability to supply product to the market."
Company officials say the costs associated with the closure will involve a one-time pre-tax charge in the first quarter of 2002 of approximately $8 million to cover exit costs and asset write-offs, which are mostly non-cash charges. The net cash outflow associated with the project in 2002 will be approximately $1.5 million.
Now that the company has made the decision to shut the plant, Playtex will now study what it intends to do with the Watervliet facility. Peterson notesthe Westport, CT.-based company plans to give the review a high priority, but at the moment has not made a determination on whether it plans to sell the property.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
