Metal and plastics specialty manufacturer A. M. Castle & Co., of Oak Brook,, announced plans to restructure the company, which it said will improve its operating profit by $33 million and reduce its workforce by 10 percent once implemented this year.
The restructuring will involve streamlining operations and consolidating facilities, the company said in a statement. While the company said it will result in a 10 percent reduction in workforce, it did not say where specific cuts will occur.
"This broad, performance-enhancing plan will enable us to better serve our customers by organizing our operations around them and their needs," said A.M. Castle President and CEO Scott Dolan. "Our goals are to simplify how we do business, optimize inventory levels, reduce waste, and improve on-time performance, which we expect will help us increase revenue while reducing costs. It is a critical step in improving our operating results, positioning Castle for greater long-term growth and creating increased value for our shareholders."
The plan calls for the converting three independent commercial units into three vertical sales teams in the company's aerospace, oil & gas, and industrial markets, with each team led by a vice president. A new position of Chief Commercial Officer will be created, with that person overseeing the vertical sales team, the company said in a release, The company is implementing several changes to its compensation programs to align with the new operating plans, including a new sales incentive plan.
Castle will also consolidate its separate procurement, operations, human resources, finance and information technology to provide centralized support for the vertical sales teams.
The company plans to consolidate five warehouse facilities into the existing network. There are 30 metals segment branches in North America, Europe and Asia, which include warehousing, sales, product processing and other operations. Castle will maintain local sales offices to continue serving customers in the markets in which it plans to close warehouses.
Castle will implement new performance improvement programs for its staff as well, including a continuous performance improvement program focused on direct and indirect sourcing, transportation, strategic pricing initiatives, back office functions, and optimizing inventory investment.
The restructuring actions are expected to generate $20 million of operating profit improvement in 2013, the company said. Total pretax charges associated with these actions is expected to be approximately $10 million in 2013, resulting in $10 million of anticipated operating profit improvement for 2013. These actions are expected to result in $33 million of annualized ongoing operating profit improvement. The restructuring will reduce its workforce by about 10 percent.
"We believe that the operating and financial targets that we have established are achievable, and we believe that the three end-markets we target offer attractive long-term growth potential. By delivering value-add solutions to our customers, we plan to grow our share of business with them. Our entire organization will be focused on implementing this plan," Dolan said.