Fleetwood Announces Motor Home Production Consolidation
October 10 2008 - 8:30AM
PR Newswire (US)
- Production of motor homes in Paxinos, Pennsylvania, will be
relocated to plants in Decatur, Indiana - RIVERSIDE, Calif., Oct.
10 /PRNewswire-FirstCall/ -- Fleetwood Enterprises, Inc. (NYSE:FLE)
announced today that it is relocating motor home production from
its plant in Paxinos, Pa., to its plants in Decatur, Ind. The
Paxinos manufacturing facility, which builds Class A gas and Class
C products, will cease operations effective early December 2008.
The full line of products currently built in Paxinos will be
transferred to the Decatur manufacturing complex, which currently
builds Class A diesel products, during the fiscal third quarter.
Fleetwood's other Class A gas and Class C facility in Riverside,
Calif., will not be affected by this consolidation. "This is a
difficult but necessary operational change," said Paul Eskritt,
president of Fleetwood's RV Group. "We are now in the fourth year
of a declining motor home market and current forecasts indicate
further declines into 2009. We firmly believe that the market will
rebound, and we have enough excess capacity in Decatur to handle
this consolidation as well as a healthy increase in market demand.
Our Decatur personnel have experience building both Class A and
Class C motor homes, so we expect the transition to be smooth. In
addition to greater capacity utilization, other advantages of the
relocation include the closer proximity of our Indiana plants to
most of our primary suppliers, as well as a larger portion of our
dealer network in the East." This consolidation will not affect the
availability of Fleetwood motor homes to dealers or consumers in
the marketplace. All current brands and models will continue to be
offered. Fleetwood remains committed to providing the best quality,
highest value products to all its customers. The Company expects to
recognize costs related to the consolidation of approximately $2.2
million in its fiscal second quarter, with an additional $2.0
million in its fiscal third quarter. Any potential impairment
charges on the Paxinos plant are being evaluated. Ongoing savings
are estimated to approach $1.5 million per quarter beginning with
the fiscal fourth quarter. Cash generated by a permanent reduction
to working capital by the end of the fiscal third quarter is
expected to more than offset the costs of the consolidation. "We
are naturally concerned about the impact this action has on our
associates, many of whom have long-term service with Fleetwood,"
Eskritt said. "This decision in no way reflects on our excellent
workforce or the Paxinos community. The difficult decision to close
the plant is strictly market-related. Our associates were notified
today of the consolidation, and they will be entitled to pay and
benefits for at least 60 days. In addition, career assistance will
be provided to all those affected." The Paxinos plant, which opened
in 1973, currently employs approximately 325 people. About
Fleetwood Fleetwood Enterprises, Inc., through its subsidiaries, is
a leading producer of recreational vehicles and manufactured homes.
This Fortune 1000 company, headquartered in Riverside, Calif., is
dedicated to providing quality, innovative products that offer
exceptional value to its customers. Fleetwood operates facilities
strategically located throughout the nation, including recreational
vehicle, factory-built housing and supply subsidiary plants. For
more information, visit the Company's website at
http://www.fleetwood.com/. This press release contains certain
forward-looking statements and information based on the beliefs of
Fleetwood's management as well as assumptions made by, and
information currently available to, Fleetwood's management. Such
statements, including those regarding costs, charges and savings
related to the consolidation, reflect the current views of
Fleetwood with respect to future events and are subject to certain
risks, uncertainties, and assumptions, including risk factors
identified in Fleetwood's 10-K and other SEC filings. These risks
and uncertainties include, without limitation, the lack of
assurance that we will regain sustainable profitability in the
foreseeable future; the effect of ongoing weakness in both the
manufactured housing and the recreational vehicle markets; the
effect of a decline in home equity values, volatile fuel prices and
interest rates, global tensions, employment trends, stock market
performance, the availability of financing in general, and other
factors that can have a negative impact on consumer confidence,
which may reduce demand for our products, particularly recreational
vehicles; the availability and cost of wholesale and retail
financing for both manufactured housing and recreational vehicles;
the effect on our sales of aggressive discounting by competitors;
our ability to comply with financial tests and covenants on
existing debt obligations; our ability to obtain, on reasonable
terms if at all, the financing we will need in the future to
execute our business strategies; our ability to meet the repayment
terms of our outstanding convertible debt instruments, including
the 5% convertible senior subordinated debentures; potential
dilution associated with equity or equity-linked financings we may
undertake to raise additional capital and the risk that the equity
pricing may not be favorable; the cyclical and seasonal nature of
both the manufactured housing and recreational vehicle industries;
the increasing costs of component parts and commodities that we may
be unable to recoup in our product prices; the potential for
excessive retail inventory levels in the manufactured housing and
recreational vehicle industries; the volatility of our stock price;
repurchase agreements with floorplan lenders, which could result in
increased costs; potential increases in the frequency of product
liability, wrongful death, class action, and other legal actions,
including actions resulting from products we receive from our
suppliers; and the highly competitive nature of our industries.
Contact: Lyle Larkin, Vice President -- Treasurer (951) 351-3535
Kathy A. Munson, Director -- Investor Relations (951) 351-3650
DATASOURCE: Fleetwood Enterprises, Inc. CONTACT: Lyle Larkin, Vice
President - Treasurer, +1-951-351-3535, or Kathy A. Munson,
Director - Investor Relations, +1-951-351-3650, both of Fleetwood
Enterprises, Inc. Web site: http://www.fleetwood.com/
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