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A business consultancy, based in London, England, John Sacks' JSA Consultancy Services provides expert, in-depth, information advice and guidance as to how to exploit successfully the office furniture and interiors markets in Europe, North America, Australasia and Japan.

Steelcase to move production from Germany to the Czech Republic

Thursday 17 October 2013

Steelcase Inc.announced today two actions intended to safeguard its global competitiveness through changes in its EMEA manufacturing footprint. The Company has initiated procedures with the applicable works councils regarding the closure of a manufacturing facility in Germany. In connection with this project, the Company expects to incur approximately $20 to $25 million of cash restructuring costs, with approximately $15 to $20 million relating to workforce reductions and approximately $5 million relating to manufacturing consolidation and production moves. The amount of restructuring costs expected to be incurred in fiscal year 2014 for this project are immaterial, with the majority of costs associated with this project expected to be incurred in fiscal year 2015. In addition, the Company anticipates it will incur approximately $5 to $10 million of costs associated with labor inefficiencies over the next eighteen months as a result of the manufacturing consolidation and production moves.

The Company also announced an investment to establish a new manufacturing location in the Czech Republic. The Company expects to make capital investments in this facility of approximately $25 million, with initial investments expected to be approximately $10 to $15 million during the third and fourth quarters of fiscal year 2014. These amounts are incremental to the Company’s previous estimates of capital expenditures for fiscal year 2014.

The Company anticipates annualized savings from these actions will be approximately $10 million when fully implemented by the end of fiscal year 2016.

The Company stated that the economic environment in Western Europe remains challenging, impacting the demand for the Company’s products in the EMEA segment. The actions being announced today, in addition to previously announced actions, are part of the Company’s on-going multi-year EMEA strategy to improve revenue and the fitness of its business model. The Company anticipates the EMEA segment will continue to report adjusted operating losses until the benefits of the multi-year EMEA strategy are more fully realized and the overall economic environment in Western Europe improves.

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