The company, a designer, manufacturer, importer and marketer of upholstered and wood furniture for the residential, recreational vehicle, office, hospitality and health-care markets, cited the poor economic conditions in the recreational vehicle and housing markets as the reason for the decision.
About 250 employees would be affected by the consolidation of manufacturing operations during the next two to three months, according to the company.
Products currently manufactured in the New Paris facility would be transitioned to Dubuque, and the current Lancaster production would be transferred to another as-yet unnamed manufacturing facility in order to meet customer shipment requirements, the company said.
“The closure of these manufacturing facilities will more closely match our manufacturing capacity with our expected demand for residential and recreational vehicle seating products,” said Ronald Klosterman, president and CEO of Flexsteel. “The demand for residential furniture products has continued to decline with the depressed housing market, the sub prime mortgage default driven credit crisis and higher fuel costs.”
On account of the consolidation of manufacturing, the company anticipates pre-tax restructuring and impairment charges to be in the range of $2 million to $2.5 million in the first half of fiscal year 2009. Following the consolidation, the company expects annual pre-tax savings of $3.5 million to $4 million.
The company estimates the manufacturing consolidation and transition to be completed by Dec. 31.
Flexsteel began operations in Lancaster in 1955 and in New Paris in 1982.
“We appreciate the long-term relationships with our skilled and dedicated employees at these locations and are saddened to bring these operations to a close,” Klosterman said. “We wish all of our affected employees much success in the future.”
The company said it intends to continue its warehousing and shipping operations at the Lancaster facility.
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