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Xerium Technologies, Inc. (NYSE: XRM), a leading global manufacturer of clothing and roll covers used primarily in the paper production process, is announcing today the closing of 2 more of its manufacturing plants, the further reduction of headcount in Europe and the movement of polyurethane roll casting equipment to China. Within the last year, the company has initiated the closing of 4 manufacturing operations, installed new machines in low cost countries, and lowered its SG&A costs. The company is in the beginning stages of a multi-year repositioning of its cost structure and asset base to better mirror its served markets.
Xerium has commenced negotiations to close its paper machine clothing facility in Zizurkil, Spain with its employees’ representatives and is closing its spreader roll facility in Charlotte, North Carolina. The company expects permanent annualized cost savings of $3.2 million from these actions.
“These closures, while difficult on the affected people and communities, are reflective of Xerium’s need to restructure its cost profile and to better align its asset base with natural market sizes”, said Harold Bevis, Xerium’s President and Chief Executive Officer. “These actions demonstrate our management team’s resolve to take immediate and continuous steps to get Xerium back on track to deliver increased Adjusted EBITDA and shareholder value.”
The measures announced today are additive to previously announced cost restructuring actions. Those previously announced actions are expected to result in annual savings of $13.8 million, bringing the cost-takeout total to $17.0 million. These cumulative actions include:
Reduction of selling costs in Europe via termination of sales agency agreements
Closure of clothing production operation in Argentina
Closure of roll covering plant in France
Reduction of base costs in Europe via headcount reduction
Closure of clothing plant in Spain
Closure of roll covering plant in North Carolina
Redeployment and expansion of capabilities and capacity in China and Mexico
“The company is just getting underway with its multi-year repositioning and expects significant additional cost restructuring actions in the future. There is a pace to these repositioning actions as they are complicated and are all being funded from the company’s natural cash flow”, said Harold Bevis.