Modine Manufacturing Company (NYSE: MOD)
, a diversified global leader in thermal management technology and solutions, today announced its intention to close its manufacturing facility in McHenry, Illinois. The closure is expected to impact approximately 135 full-time employees, who will receive a variety of support services. This action reflects Modine’s proactive focus on operating scale production facilities across the globe in order to remain cost-competitive.
Modine plans to transfer the McHenry production to other facilities in North America, including those in Nuevo Laredo, Mexico, Lawrenceburg, Tennessee and Jefferson City, Missouri. The McHenry plant makes parallel flow and serpentine condensers, oil coolers and radiators for the automotive, commercial vehicle, off-highway and building HVAC markets. Plans call for the plant to close over an approximate 18-month period. Modine will provide the affected employees severance benefits and work closely with the Illinois Department of Labor and other state and local agencies to offer employment assistance and other services.
“Closing operations is never easy,” said Scott Wollenberg, Regional Vice President – North America. “However, our analysis of Modine’s global product lines and North American manufacturing strategy led us to conclude that the best long-term solution for Modine and its shareholders is to consolidate all North American parallel flow heat exchanger manufacturing into other North American facilities. Closing the McHenry plant will help us rationalize production, maintain the scale we need in our manufacturing operations and improve our overall competitiveness and profitability. We are committed to making the transition as seamless as possible for our customers and to assisting our affected employees during the transition.”
In connection with this upcoming closure, the Company expects to incur a charge of approximately $2 million in the fourth quarter of its 2014 fiscal year, primarily related to anticipated severance payments and fixed asset impairment charges. In addition to temporary inefficiencies, the Company expects to incur total closure costs of approximately $5 million over the entire closure period. The Company anticipates it will generate annual savings of at least $5 million once the closure is completed in fiscal 2016.