STR Holdings, Inc. (NYSE: STRI) announced that it will further streamline its U.S. operations and improve its cost structure by shutting down operations at its St. Augustine, FL manufacturing facility.
"A relatively slow PV market affords us the opportunity to fully consolidate our U.S. operations," said Robert S. Yorgensen, President of STR Solar. "This decision reflects our continued focus on optimizing our global capacity and significantly reducing our costs." Yorgensen added, "We don't believe the closure of this satellite operation will be disruptive to any of our customers, as sales and customer service for product made in St. Augustine have always been handled directly by our team in Connecticut."
The Company will cease production at its Florida plant on October 7, 2011 and expects to exit its 20,000 square foot leased facility by the end of the year. Production will be consolidated into the Company's 275,000 square foot facility in East Windsor, Connecticut, along with machinery and employees from Enfield and Somers, CT. The Company expects that approximately 45 employees will be affected by this closure.
"This is part of our plan to streamline our U.S. operations from three smaller production facilities into a central location, which we believe can operate more efficiently and at a lower cost per unit," said Richard White, Chief Operating Officer - STR Solar.
The Company expects the closure to result in $1.2 million in pre-tax charges, less than half of which will be cash outlays for employee severance and other costs. The Company expects annual pre-tax cash savings of approximately $1 million. The consolidation will also have a positive impact on gross margin, driven by lower fixed costs and improved absorption from higher capacity utilization.
The Company will provide more details on this closure during its third-quarter earnings call.
