CommScope plans to discontinue operations at its Connectivity Solutions Manufacturing Inc. subsidiary in Omaha, Neb. -- which will result in 400 employees losing their jobs -- and relocate manufacturing to one or more of its other facilities in North America.
The company, a major supplier of coaxial cabling and other communications equipment, in January laid off 110 of the more than 500 employees at the facility, and said at the time that it was contemplating shutting down the plant. The Omaha facility is expected to be closed in late 2011.
CommScope expects to incur total pretax restructuring costs of $45 million to $53 million related to shutting down the Omaha facility and relocating operations. Of that amount, cash costs are estimated to be $35 million to $40 million for "employee-related" expenses. CommScope expects to take an impairment charge of $8 million to $10 million related to the Omaha facility, with equipment relocation costs amounting to $2 million to $3 million.
CommScope expects annualized pretax savings of approximately $18 million to $22 million upon completion of the Omaha facility closure. The company anticipates seeing about half of those savings in 2011, primarily in the second half of the year.
"A combination of difficult circumstances -- including facility underutilization, high labor costs, customers' spending slowdown and their demand for lower-cost products -- is causing CommScope to commit to alternative manufacturing options in order to satisfy customers while protecting the profitability of our business," CommScope president and chief operating officer Eddie Edwards said in a statement.
Added Edwards, "These actions are difficult yet unavoidable, and we regret the hardship on our employees. We are grateful to our CSMI Omaha workforce for their outstanding service." CommScope promoted Edwards to the president and COO position effective at the beginning of 2010.
CommScope reported $77.8 million net profit on $3.0 billion in revenue for 2009. The Hickory, N.C.-based company had 12,500 employees at the end of last year, most of which are located outside the U.S.
The company currently employs approximately 400 people in its CSMI subsidiary in Omaha, all of whom will be affected by the manufacturing relocation. Another 70 employees in corporate functions currently housed in the CSMI facility are expected to relocate to a new Omaha location prior to the plant's closing.
CommScope manufactures and sells products including coax cable, cabinets for DSL and fiber-to-the-node applications, and radio frequency subsystem solutions for wireless networks.