Molex closing some facilities, cutting 1,200 jobs
Lisle, IL—Molex Inc. plans to close several manufacturing facilities in the U.S. and Europe and lay off about 1,200 employees to reduce long-term costs and better optimize its plant utilization.
Lisle, IL— Molex Inc. plans to close several manufacturing facilities in the U.S. and Europe and lay off about 1,200 employees to reduce long-term costs and better optimize its plant utilization. These announcements were made during Molex’s recent earnings report for its third fiscal quarter and nine-months ending March 31, 2005. The firm also announced general and administrative cost reductions and a $250 million increase in its stock repurchase program.
The company will close its industrial manufacturing facility in New England, and cease manufacturing at its Detroit-based automotive facility. The automotive development center, also in Detroit, will continue to operate. Production at these facilities will be transferred to other plants in the region.
In Europe, Molex will close manufacturing facilities in Ireland and Portugal, and shrink a development center in Germany. Production at these facilities will be transferred to other plants in the region. Included in the charge is an amount to expense certain product related tooling in the Far East South and Europe.
To further reduce its selling, general, and administrative costs in the U.S., Europe, and at its corporate office, Molex estimates that it will have to reduce its workforce by approximately 1,200 people. These layoffs will be partially offset by additions at the facilities where production is being transferred. Total savings from the restructuring have not yet been finalized. The company plans to provide more details in the near future.
The company adds its manufacturing realignment will require it to take an estimated pretax charge of $25-$30 million in fiscal 2005’s fourth quarter and an additional estimated pretax charge of $20-$30 million during fiscal 2006. The actual timing of the facility closures, related layoffs, and the resulting fiscal 2006 charge will depend on several factors, such as achieving a phased and efficient production transfer.
'This is an extremely difficult but necessary step towards a more focused manufacturing base in order to meet the requirements of our customers,” says Fred Krehbiel, Molex’s co-chairman and CEO. “At the same time, we’re working to reduce our SG&A to a level that is both competitive and sustainable, and ultimately to provide the level of returns Molex and our shareholders expect. Implementation of this restructuring will begin in fiscal 2005’s fourth quarter, and will continue through fiscal 2006. We expect to provide additional details as we move through the process.'
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