McConnellsburg, Pa.-based JLG Industries recently announced further actions of its ongoing longer-term strategy to streamline operations and reduce fixed and variable costs.
As part of JLG's capacity rationalization plan commenced in early 2001, the 130,000-square-foot facility in Bedford, Pa., which currently produces selected scissor lift models, will be temporarily idled and production integrated into the company's Shippensburg, Pa., facility.
Additionally, reductions in selling, administrative and product development costs will result from changes in the global organizational and process consolidations. When these changes are fully implemented, the company expects to generate about $20 million in annualized savings at a cost of $9.5 million representing a payback of approximately six months.
According to Jim Woodward, executive vice president and CFO, the company will reduce 189 people globally and transfer 99 production jobs from the Bedford operations to the Shippensburg facility. Production of scissor lifts, which are now assembled in Bedford, will be integrated into the company's newer 300,000-square-foot facility in Shippensburg by fiscal year end. Bedford production team members will be afforded transfer opportunities.
“These actions will result in $3.5 million of restructuring costs, $4.4 million of restructuring-related costs and $1.6 million of capital expenditures,” said Woodward. Almost all of these expenses will be cash charges, which will be recorded over the next three quarters. In the current fiscal quarter, estimated restructuring charges of $1.3 million will be combined with capital expenditures of $200,000 for a total cash outlay of $1.5 million. Our top priorities over the near term continue to focus on reducing working capital, reducing cost and improving free cash flow.”
