ST. LOUIS–Citing “unusually weak economic conditions,” Furniture Brands International announced this morning that it will expand its manufacturing facilities in Indonesia, exit various local retail locations and consolidate some of its manufacturing still done domestically.
The company, presenting the moves as an acceleration of its strategic plan, said it expects to realize savings of $40 million to $50 million when all the actions are fully implemented. Eventually, Furniture Brands said it foresees savings of $55 million to $70 million annually.
In Indonesia, Furniture Brands has purchased property to increase by five-fold its Semarang case goods operation, which produces furniture for higher-end consumers. The facility, along with other Asian contract manufacturing operations, will be managed by a new Furniture Brands Asia office in Dongguan, China.
In terms of retail, Furniture Brands said it continues to hold lease obligations for the Lane and Broyhill stores that it closed in 2007. It said its decision to “exit these non-strategic locations” will result in both pretax charges and cash expenses of $13 million to $15 million.
Finally, the firm will consolidate some of its plants in North Carolina and Mississippi. The resulting operations will be improved by “world class continuous manufacturing methodologies,” which will entail pretax charges of $9 million to $10 million, plus a smaller cash charge.