Fleetwood Enterprises Inc. announced today (Oct. 10) that it is relocating motorhome production from its plant in Paxinos, Pa., to its facilities in Decatur, Ind.
The Riverside, Calif.-based company said that the Paxinos manufacturing facility, which builds Class A gas and Class C products, will cease operations in early December. The plant opened in 1973 and currently employs approximately 325 people.
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 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 motorhome 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 motorhomes, 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.”
The company said the consolidation will not affect the availability of Fleetwood motorhomes 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.
Fleetwood noted that “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.”