General Cable Corp. is closing two of its seven North American plants that manufacture communications cables.
The plants, located in Monticellow, Ill., and Sanger, Calif., employ about 200 associates and utilize more than 350,000 square feet in the production of service wire sold to the telecommunications industry. The company has also sold its small, non-strategic United Kingdom-based specialty cables business, and has formed a joint venture company to manufacture and market optical fiber cables, and plans to record an additional charge related to these actions.
The company expects to report in its second quarter 2002 results for its continuing operations a $20 to $25 million non-recurring pre-tax charge of which approximately $7 million will be cash costs and a $6 million pre-tax charge for discontinued operations, of which approximately $2.6 million will be cash.
"The prolonged downturn in the demand for communications cables provided the opportunity for us to further enhance our cost leadership in these products," says Gregory Kenny, president of General Cable. "We believe that the relocation of the productive capacity from these plants to other existing facilities will allow us to significantly reduce our communications products. At the current levels of production, the plant closures are expected to generate a net cash positive result in less than one year."
Kenny says if telecom spending remains low throughout the summer, General Cable will reduce production levels in its two domestic telephone exchange cable plants beginning in the third quarter.
"At the anticipated reduced production levels, the resulting unabsorbed overhead in the plants would reduce the company's earnings per share by approximately $0.10 to $0.12 during the second half of 2002," Kenny says.
General Cable, based in Highland Heights Ky., manufactures copper, aluminum and optical fiber wire and cable products. For more information visit www.generalcable.com.
