La-Z-Boy Cuts 500 Jobs, Shuts Plants In Restructuring

March 8, 2007  by in UnCategorized   

By Home Furnishings Business in Upholstery on March 2007 La-Z-Boy, Monroe, Mich., announced a sweeping restructuring Thursday that will shut two upholstery factories and eliminate about 500 jobs. As part of the move, the company will also close a lumber mill in North Wilkesboro, N.C., and consolidate three operations into one at Kincaid’s Taylorsville, N.C., upholstery operation.

In a statement, President and CEO Kurt Darrow said the moves, which will produce annual savings of $11 million, are designed to “ align our company with the current business environment and strengthen our positioning going forward.”

La-Z-Boy’s recliner and occasional chair factory in Lincolnton, N.C., will close in July, eliminating 250 jobs. Work will be shifted to facilities in Mississippi, Arkansas and Tennessee. Another 150 jobs will be eliminated in Iuka, Miss., when a sofa and chair factory there is shut and production is shifted to other Bauhaus factories in Mississippi. The North Wilkesboro, N.C., lumber mill closing and consolidation in Taylorsville, N.C., will cut another 100 jobs.

“We regret the impact these actions will have on the families and lives of those employees affected and greatly appreciate the contribution of each employee and thank them for their years of dedicated service,” Darrow said, according to a company statement. “However, these moves are necessary for our company to remain competitive and we will provide outplacement assistance to these employees during this transition period. Collectively, these actions are expected to save the company $11 million per year when they are fully implemented, and, when coupled with our ongoing process improvement initiatives, will result in increased efficiencies in our remaining manufacturing facilities.”

After the closings and consolidations, La-Z-Boy will have more than 5.6 million square feet of upholstery manufacturing space in North America and 8,000 employees in those facilities.

La-Z-Boy will take a pre-tax charge of approximately $9 million to $10 million, or $0.11 to $0.12 per share. The charge mainly covers severance and other benefit costs and will also include the write-down of certain fixed assets and other associated costs. The majority of these charges will be incurred in the fourth quarter of the company’s 2007 fiscal year with the majority of the balance of the charge taken in the first fiscal quarter of 2008.