Commercial Vehicle Group Announces Plant Consolidation to Optimize Cost Structure and Enhance Aftermarket Growth

Rhea-AI Summary

Commercial Vehicle Group (Nasdaq: CVGI) announced the permanent consolidation of its Piedmont, Alabama facility as part of a cost reduction plan initiated on May 18. This 150,000 square foot plant, which employs approximately 49 people, primarily serves the commercial vehicle aftermarket. Operations will be moved to the Vonore, Tennessee facility, expected to be completed by Q4 2020. The consolidation aims to strengthen CVGI's competitiveness by reducing lead times and optimizing costs, with support for affected employees including retention benefits.

Positive

• Consolidation aims to strengthen competitiveness through reduced lead times and improved cost structure.
• Retention benefits and transfer opportunities for affected employees provided.

Negative

• Closure of Piedmont facility affecting 49 employees and the local community.
• Potential risks associated with consolidation processes may impact operational efficiency.

NEW ALBANY, Ohio, July 15, 2020 /PRNewswire/ -- Commercial Vehicle Group Inc. (the "Company") (Nasdaq: CVGI), a leading supplier of seating systems, electro-mechanical assemblies, engineered material products, and warehouse automation subsystems announced the permanent consolidation of its manufacturing and distribution facility in Piedmont, Alabama in connection with the Company's cost reduction plan previously announced on May 18. 

The Piedmont facility primarily serves the commercial vehicle aftermarket, is more than 150,000 square feet in size, and employs approximately 49 employees.  The work performed at the Piedmont facility will be transferred to the Company's manufacturing and distribution facility in Vonore, Tennessee following the closure, which is expected to be substantially completed in the fourth quarter of 2020. Vonore will become the new headquarters for CVG's Commercial Vehicle Aftermarket business.

"Plant closure decisions are always difficult. We believe consolidating the aftermarket manufacturing and distribution operations into one central location will strengthen our capabilities and improve our competitiveness through reduced lead times, improved on-time delivery, and further optimization of our cost structure," said Harold Bevis, President and Chief Executive Officer of Commercial Vehicle Group. "We are mindful of the impact this decision will have on our Piedmont employees and the surrounding community and we thank them for their dedication and years of service. We intend to maintain our existing customer service team to ensure customer continuity and a seamless transition for our valued customers. The aftermarket business is an important part of CVG, and we believe this strategic move will further enable us to grow the business and deliver value to all our stakeholders. " 

The Company will provide assistance to affected employees including retention benefits and opportunities to transfer to other CVG facilities.

About Commercial Vehicle Group, Inc.

Commercial Vehicle Group, Inc. (through its subsidiaries) is a leading supplier of seating systems, electro-mechanical assemblies, engineered material products, and warehouse automation subsystems for many markets including the following: trucking, military, warehouse automation, bus, agriculture, specialty transportation, mining, industrial equipment and off-road recreational markets. Information about the Company and its products is available on the internet at www.cvgrp.com.

Forward-Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. These statements often include words such as "believe", "anticipate", "plan", "expect", "intend", "will", "should", "could", "would", "project", "continue", "likely", and similar expressions. In particular, this press release may contain forward-looking statements about Company expectations for future periods with respect to its plans to improve financial results and enhance the Company, the future of the Company's end markets, including the short-term and potential longer-term impact of the COVID-19 pandemic on Class 8 and Class 5-7 North America truck build rates and performance of the global construction equipment business, expected cost savings, the Company's initiatives to address customer needs, organic growth, the Company's plans to focus on certain segments and markets and the Company's financial position or other financial information. These statements are based on certain assumptions that the Company has made in light of its experience as well as its perspective on historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Actual results may differ materially from the anticipated results because of certain risks and uncertainties, including but not limited to: (i) a material weakness in our internal control over financial reporting which could, if not remediated, result in material misstatements in our financial statements; (ii) future financial restatements affecting the company; (iii) general economic or business conditions affecting the markets in which the Company serves; (iv) the Company's ability to develop or successfully introduce new products; (v) risks associated with conducting business in foreign countries and currencies; (vi) increased competition in the medium- and heavy-duty truck markets, construction, agriculture, aftermarket, military, bus and other markets; (vii) the Company's failure to complete or successfully integrate strategic acquisitions and the impact of such acquisitions on business relationships; (viii) the Company's ability to recognize synergies from the reorganization of the segments; (ix) the Company's failure to successfully manage any divestitures; (x) the impact of changes in governmental regulations on the Company's customers or on its business; (xi) the loss of business from a major customer, a collection of smaller customers or the discontinuation of particular commercial vehicle platforms; (xii) the Company's ability to obtain future financing due to changes in the lending markets or its financial position; (xiii) the Company's ability to comply with the financial covenants in its debt facilities; (xiv) fluctuation in interest rates or change in the reference interest rate relating to the Company's debt facilities; (xv) the Company's ability to realize the benefits of its cost reduction and strategic initiatives and address rising labor and material costs; (xvi) volatility and cyclicality in the commercial vehicle market adversely affecting us, including the impact of the current COVID-19 pandemic; (xvii) the geographic profile of our taxable income and changes in valuation of our deferred tax assets and liabilities impacting our effective tax rate; (xviii) changes to domestic manufacturing initiatives; (xix) implementation of tax or other changes, by the United States or other international jurisdictions, related to products manufactured in one or more jurisdictions where the Company does business (xx) security breaches and other disruptions that could compromise our information systems;  (xxi) the impact of disruptions in our supply chain or delivery chains; (xxii) litigation against us; (xxiii) the impact of health epidemics or widespread outbreak of contagious disease; and (xxiv) various other risks as outlined under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for fiscal year ending December 31, 2019.  There can be no assurance that statements made in this press release relating to future events will be achieved. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by such cautionary statements.

                             

View original content to download multimedia:http://www.prnewswire.com/news-releases/commercial-vehicle-group-announces-plant-consolidation-to-optimize-cost-structure-and-enhance-aftermarket-growth-301094250.html

SOURCE Commercial Vehicle Group, Inc.

FAQ

What is the recent announcement from Commercial Vehicle Group (CVGI) regarding its facilities?

CVGI announced the consolidation of its Piedmont, Alabama facility into its Vonore, Tennessee location to optimize costs and improve competitiveness.

What will happen to the employees at the Piedmont facility after its closure?

49 employees will receive retention benefits and opportunities to transfer to other CVGI facilities.

When is the consolidation of the Piedmont facility expected to be completed?

The consolidation is expected to be substantially completed in the fourth quarter of 2020.

How will the consolidation affect CVGI's operations?

The consolidation aims to strengthen CVGI's capabilities, reduce lead times, and optimize the cost structure.