Cable-equipment maker CommScope Inc. said it will close its Scottsboro, Ala., manufacturing plant as part of a wider initiative to cut costs.
CommScope will shutter the Scottsboro plant in late 2006, farming out the work done there to its 1 million-square-foot facility in Catawba, N.C., and its international plants. CommScope makes broadband cable in Scottsboro.
The company said in a statement that the plant closure, coupled with moves to improve manufacturing efficiencies at its other operations, will result in annualized pre-tax savings of between $35 million and $40 million once the initiatives are completed in early 2007. About $15 million to $20 million of that savings is expected in the second half of 2006, the company said.
The 150,000-square-foot Scottsboro plant currently has about 185 employees.
“The decision to close the broadband facility in Scottsboro is a difficult one for CommScope and we understand how it affects employees and the community of Scottsboro,” CommScope chairman and CEO Frank Drendel said in a statement. “It will bring to an end more than a decade of solid operations performance. This action is unfortunate, but necessary to improve overall factory efficiency and reduce cost.”
In addition, CommScope will consolidate operations at its Omaha, Neb., Connectivity Solutions Manufacturing, Inc. subsidiary — which makes structured cabling and components for enterprise applications; cable and apparatus primarily for telephone central office applications; and secure environmental enclosures for telecom carriers — outsourcing some of the work to lower-cost CommScope facilities.
CommScope said that additional real estate at the Omaha site will become unoccupied as a result of the consolidation and will be available for sale or lease. Earlier this year, the company agreed to sell a vacant 410,000-square-foot warehouse and 42 acres at the Omaha facility for $10.5 million.
CommScope also has hired CIBC World Markets to advise it on strategic options for its telephone central office business.
CommScope stock was up 33 cents each to $19.03 per share in 4 p.m. trading Sept.1.