Modine Announces Plans to Close McHenry, Illinois Manufacturing Facility; Will Offer Support Services to Affected Employees
Modine Manufacturing Company (NYSE: MOD), a diversified global leader in thermal management technology and solutions, today announced its intention to close its manufacturing facility in McHenry, Illinois. The closure is expected to impact approximately 135 full-time employees, who will receive a variety of support services. This action reflects Modine's proactive focus on operating scale production facilities across the globe in order to remain cost-competitive.
Modine plans to transfer the McHenry production to other facilities in North America, including those in Nuevo Laredo, Mexico, Lawrenceburg, Tennessee and Jefferson City, Missouri. The McHenry plant makes parallel flow and serpentine condensers, oil coolers and radiators for the automotive, commercial vehicle, off-highway and building HVAC markets. Plans call for the plant to close over an approximate 18-month period. Modine will provide the affected employees severance benefits and work closely with the Illinois Department of Labor and other state and local agencies to offer employment assistance and other services.
“Closing operations is never easy,” said Scott Wollenberg, Regional Vice President – North America. “However, our analysis of Modine's global product lines and North American manufacturing strategy led us to conclude that the best long-term solution for Modine and its shareholders is to consolidate all North American parallel flow heat exchanger manufacturing into other North American facilities. Closing the McHenry plant will help us rationalize production, maintain the scale we need in our manufacturing operations and improve our overall competitiveness and profitability. We are committed to making the transition as seamless as possible for our customers and to assisting our affected employees during the transition.”
In connection with this upcoming closure, the Company expects to incur a charge of approximately $2 million in the fourth quarter of its 2014 fiscal year, primarily related to anticipated severance payments and fixed asset impairment charges. In addition to temporary inefficiencies, the Company expects to incur total closure costs of approximately $5 million over the entire closure period. The Company anticipates it will generate annual savings of at least $5 million once the closure is completed in fiscal 2016.
Modine, with fiscal 2013 revenues of $1.4 billion, specializes in thermal management systems and components, bringing highly engineered heating and cooling technology and solutions to diversified global markets. Modine products are used in light, medium and heavy-duty vehicles, heating, ventilation and air conditioning equipment, off-highway and industrial equipment and refrigeration systems. Modine is a global company headquartered in Racine, Wisconsin (USA), with operations in North America, South America, Europe, Asia and Africa. For more information about Modine, visit www.modine.com.
This press release contains statements, including information about future financial performance accompanied by phrases such as “believes,” “estimates,” “expects,” “plans,” “anticipates,” “intends,” and other similar “forward-looking” statements, as defined in the Private Securities Litigation Reform Act of 1995. Modine's actual results, performance or achievements may differ materially from those expressed or implied in these statements because of certain risks and uncertainties, including, but not limited to, those described under “Risk Factors” in Item 1A of Part I of the company's Annual Report on Form 10-K for the year ended March 31, 2013 and under Forward-Looking Statements in Item 7 of Part II of that same report and in the company's Quarterly Reports on Form 10-Q for the quarters ended June 30, 2013, September 30, 2013 and December 31, 2013. Other risks and uncertainties include, but are not limited to, our ability to complete the transition of McHenry production to other facilities efficiently and effectively, and other risks and uncertainties identified by the company in public filings with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements.
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