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The estimated annual recurring pretax cost savings expected to result from this consolidation is $2.1 million with one-time implementation costs of $1.6 million, of which $0.8 million will be recorded this quarter as a restructuring charge.
''Chain manufacturing consolidation is another major step in Columbus McKinnon's Strategic Plan,'' said Timothy T. Tevens, president and CEO, ''and the benefits of consolidating our chain manufacturing operations are significant and in the overall best interests of all our stakeholders.''
Tevens stated, ''The consolidation process is expected to be completed by May 2003, following an orderly integration of chain manufacturing production into Columbus McKinnon's chain manufacturing facilities located in Lexington, Tenn., and Santiago Tianguistenco, Mexico. We will work with our affected associates to assist them with positions in other Columbus McKinnon locations and, for those who do not relocate, will provide severance and outplacement support.''
Columbus McKinnon will continue to aggressively pursue the Canadian market with its Cobourg, Ontario and Edmonton, Alberta warehouses and a comprehensive product line of chain, forgings, hoists, and other material handling products. Tevens added, ''Our Canadian Sales force will remain fully intact and we remain committed to serving our valued customers in Canada as we have in the past with our high quality products, delivered on-time at a competitive price.''
As previously announced, Columbus McKinnon continues to review its current manufacturing and facility configuration to ensure it has the most efficient and effective organization to meet the changing requirements of its markets. The facility rationalization projects initiated in fiscal 2002, including the closure of its Yale Hoist manufacturing facility in Forrest City, Arkansas and Lister Bolt & Chain plant in Richmond, British Columbia, are complete and have been successfully integrated into other Columbus McKinnon manufacturing facilities. The annual pretax cost savings resulting from these projects are approximately $8.5 million.
In addition to the continued rationalization process, Columbus McKinnon has expanded the implementation of lean manufacturing improvement activities to fifteen of its facilities.
''We are pleased with our lean manufacturing implementation progress to-date,'' said Tevens, ''and we are realizing measurable results in improving productivity, reducing inventory, and freeing-up manufacturing space, while simultaneously improving our customer service. We also look forward to realizing additional financial benefits from our lean initiative as we continue the implementation in fiscal 2003 and 2004.''
These strategic initiatives, with others already in process, are expected to improve Columbus McKinnon's competitive position, customer service and increase cash flow for debt reduction purposes.