Franklin Electric Company Announces Plans for Manufacturing Optimization


Franklin Electric Co., Inc. announced a restructuring plan for its manufacturing facilities in North America and Brazil. In North America the Company is continuing the rationalization of manufacturing capacity between the manufacturing complex in Linares, Mexico and its other North American plants.

Initially the realignment plan includes the phased move of approximately 500,000 man hours of manufacturing activity to Linares, approximately 80 percent of which is from Siloam Springs, Arkansas. The transfer is expected to be largely complete by June, 2009 and is anticipated to reduce manufacturing labor and overhead costs. The Company has estimated the pretax charge at $6 million to $8 million over the next 3 to 4 quarters beginning with the fourth quarter of 2008 and includes severance expenses, pension charges, asset write-offs, and equipment relocation costs. Approximately two thirds of these charges will be non-cash. After this transfer is complete, the Linares facility will have sufficient capacity to absorb additional manufacturing activity and plans are being made to further rationalize capacity in late 2009 and 2010. Any additional restructuring charges will be announced when plans have been finalized.

In Brazil, in order to support sales growth, the Company will transfer its manufacturing operations in Joinville to a new facility in the same city beginning in the second half of 2009 and will sell the existing facility. The new facility will significantly improve the Company’s manufacturing capabilities and efficiencies. It is anticipated that relocation costs for this move will be approximately $0.3 million. If there are additional charges related to the disposition of the existing facility, the Company will announce them when they become known.

About Franklin Electric

Franklin Electric is a global leader in the production and marketing of systems and components for the movement of water and automotive fuels. Recognized as a technical leader in its specialties, Franklin serves customers around the world in residential, commercial, agricultural, industrial, municipal, and fueling applications.

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