A. Schulman Inc. (Akron, OH) will close its Nashville, TN compounding plant, as part of what it describes as its ongoing effort to replicate its European engineered plastics business model in North America by eliminating commodity capacity in the U.S. and shifting its focus to more profitable technical compounds. Four production lines at the Nashville facility will be shut down and roughly 60 jobs will be eliminated. A. Schulman said the move will also result in approximately 24 million lb of engineered plastics production being moved from Nashville to production lines in Akron and Bellevue, OH.
To help it expand into technical and higher-value specialty compounds, A. Schulman is investing $7 million in its Akron plant to create technical compounding capabilities. This will also add approximately 20 jobs in Akron. The Nashville facility is expected to close by no later than February 29, 2012, which marks the end of A. Schulman's fiscal 2012 second quarter. Construction in Akron is expected to begin next month, with the new production to commence by early March 2012.
Joseph M. Gingo, A. Schulman's chairman, president and CEO said that with this move the company is not exiting any existing businesses, but rather aligning its assets to optimize capacity usage and capitalize on growth opportunities. "While it's never easy to take such actions," Gingo said, "we're seeing uncertainty in the economy and flat demand as we look out into fiscal 2012 and believe these proactive steps are prudent at this time."
Once operations are discontinued at the Nashville facility, A. Schulman anticipates a total annual pre-tax benefit of approximately $4 to $5 million. The move will also result in one-time total charges of approximately $8 to $10 million. Because of those charges, A. Schulman also updated its adjusted net income guidance to between $50 million and $52 million for its fiscal year ending August 31, 2011. The company had previously guided to the lower end of its prior range of between $57 million and $62 million.