MONROE, Mich.–In a sharp cost-saving effort, La-Z-Boy will shift all its U.S. cutting and sewing operations to a single plant in Coahuila, Mexico, over the next 18 to 24 months. It will also shut its Tremonton, Utah, plant.
The furniture manufacturer, in a statement this morning, said the shift to Mexico will “impact” 1,050 employees. The Utah facility shutdown, effective this summer, will affect 630 employees. However, because production at the Utah plant will be shifted to five remaining facilities, the company said it expects to hire around 400 workers there.
After all expenses connected to the moves are paid, the firm expects to realize more than $25 million in cost savings.
Kurt L. Darrow, president and chief executive officer, said the new Mexican facility will “be able to rapidly supply domestic plants with cut-and-sewn fabrics and leathers for custom orders. … ” He added that the Mexican plant would complement similar activities in China.
After ceasing operations in Utah, the company will offer that plant for sale.
Severance, training and benefit costs, along with asset write-downs, will require the company to take a pretax charge of $17 million to $20 million, or 20 cents to 24 cents a share, in the fourth quarter.