WINCHESTER, Va., Dec. 13, 2011 /PRNewswire/ -- American Woodmark Corporation (NASDAQ: AMWD), a leading supplier of cabinetry to the remodeling and new construction industries, announced today that the continuing housing slump has led to the decision to reduce production capacity and to implement changes in certain elements of the Company's long term retirement plans.
In a realignment of the Company's manufacturing network, the Company will close a component facility in Hardy County, West Virginia and a lumber dimension operation in Hazard, Kentucky. The Company has also made the decision to offer the assembly plant in Tahlequah, Oklahoma, idled in early 2009, for sale.
Kent Guichard, Chairman and Chief Executive Officer commented, "The housing sector remains mired in a slump driven by low consumer confidence. The last four years have been the worst four years in new home construction levels since 1959. In the near term, we believe the ongoing uncertainty surrounding government finances, persistent unemployment, and restrictive credit will continue to suppress consumer confidence and demand for discretionary big ticket items, particularly those related to home purchase and home improvement."Guichard continued, "Although we have consistently gained market share, the overall drop in consumer activity has created excess capacity that is simply too expensive to maintain. These targeted reductions will increase our utilization rates and decrease overhead costs, while retaining sufficient capacity to service our customers for the foreseeable future. Our remaining network of nine manufacturing facilities will be more efficient, while retaining the ability to increase production by approximately 50% before requiring significant capital investment." Regarding the West Virginia facility, Guichard stated, "The Hardy County Plant is an older facility that will require an increasing level of investment. The combination of an aging building, outdated equipment, and changes to our product line will require significant retooling in order to meet the quality expectations of our customers. Our other component facilities are newer and already have the ability to meet both production demands and evolving product specifications. The investment required in Hardy County would not provide an adequate return in this environment." Addressing the decision on the Kentucky facility, Guichard noted, "As is the case with our component operations, the Company has excess capacity in our lumber and dimension operations. The Hazard Plant was selected for closure due to a variety of factors including access to lumber supply, flexibility, and logistics costs." Focusing on these actions, Guichard stated, "Unfortunately, the depth and duration of the current housing cycle has been extreme. The need to reduce our excess capacity is in no way reflective of the performance of the individuals in these operations. I would like to express my appreciation to the outstanding employees at both these facilities that have contributed to the success of the Company over many years. The fact that we were able to wait as long as we have to make these decisions given the economic reality is a testament to their hard work, dedication and resourcefulness."