Del consolidates manufacturing with closure of New York facility

By Simon Pitman

- Last updated on GMT

Related tags New york Finance North carolina

New York-based Del Laboratories will close its Little Falls
cosmetics manufacturing facility by the end of the year with the
loss of up to 330 staff as part of moves to streamline its
operations and consolidate it with existing facilities in North

The move forms part of the company's long-term and on-going effort to increase productivity and reduce costs following a string of lack luster financial results.

Despite an on-going restructuring programme to increase efficiencies, Del announced that in the six months ending in September 2005, it made a loss of $9.4 million, compared to a profit of $10.9 million during the same period in 2004.

The poor results have prompted the company to power ahead with the consolidation of its facilities in an effort to stave off the growing debts.

Del Laboratoriesmarkets and manufactures cosmetics and over the counter pharmaceuticals. Its flag flagship cosmetic and personal care brand is Sally Hansen, while Orajel is a leading dental care brand.

The majority of its manufacturing operations will be moved to its Rocky Point facility in Northern Carolina and that the remainder of the operations would be outsourced. The New York Stock Exchange listed company said in an official release.

The plan will also mean that it will close its existing warehousing facilities in Herkimer, New York, and convert the Little Falls facility into a warehouse.

The company says it anticipates that all of this work should be completed by the end of this year, when a pre-tax charge of between $1.9 - $2.6 million is expected to be realized, consisting mainly of employee-related charges including severance pay.

Other costs, including relocation and refurbishments are expecting to add as much as another $1 million, together with as related expenses that could top $1.25 million, which includes charges for hiring and training new employees in North Carolina as well as moving and relocation costs for manufacturing equipment. This means that total expenses relating to plant closure and relocation could top $3.85 million.

However, the company also pointed out that it expects to save as much as $1.5 million due to in payment for staff pension schemes, which could benefit the 2006 financial results by as much as $0.6 million.

The move forms part of a long-term consolidation plan that stems back to 2003, when the company closed its Long Island manufacturing plant and shifted production to Rocky Point.

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