MEDINA, OH — RPM Inc. announced a restructuring and consolidation program that will result in the closing of 23 facilities, the elimination of 10% of the company’s total work force and consolidation of distribution and warehousing operations. The company said the program is expected to generate pretax savings of $23 million annually and result in a $45 million pretax charge against earnings in the first quarter of fiscal year 2000, which began June 1.
The company declined to provide specifics on facilities to be affected by the restructuring program, pending notification of employees at those sites. Chairman and CEO Thomas C. Sullivan said the company hopes to achieve “part of the work-force reduction through normal attrition.” Approximately 730 employees will be affected.
Sullivan also said the company is unlikely to continue a long-running series of annual sales and earnings increases, which currently stands at 52 consecutive years, due to the pretax charge in the first quarter of fiscal 2000. But he said the restructuring plan “will set the stage for stronger earnings growth ahead and will do more to build long-term shareholder value than continuing the string of records.” He also said the company plans to divest “non-core product lines” that constitute approximately $100 million in annual sales, although no specifics were announced.
With the realignment, the company’s Industrial Division will include three groups: the Tremco Group, which also includes the Euclid Chemical Co., a concrete and masonry-repair business; the SonCor Group, which combines the Stonhard, Carboline, Plasite Protective Coatings and Fibergrate Composite Structures businesses; and RPM II, which will initially consist of Dryvit Systems, Kop-Coat Industrial, TCI Inc., Day-Glo Color Corp., American Emulsion Co., Alox Corp., Chemspec and RPM Belgium businesses.
Consolidations in the company’s Consumer Division will include:
- DAP/Bondex, which combines the recently acquired DAP caulks, sealants glazing and putty-compounds business with the Bondex line of similar products.
- The Wood Finishes Group, which unites the Mohawk and Star touch-up and repair products for furniture; the Chemical Coatings and Westfield Coatings furniture products businesses; and the Flecto wood-finishes business.
- Bondo/Pettit, Woolsey/Z-Spar, which combines the company’s automotive and marine aftermarket businesses.
- Canadian Consumer Operations, which combines Tremclad rust-preventative paint and sealants, Rust-Oleum coatings and Flecto wood finishes.
The company also announced a number of top management appointments in a reorganization related to the restructuring and consolidation moves. Sullivan said the management reorganization will pave the way for an orderly management transition following the retirement of himself and company President James A. Karman in early 2002. The reorganization includes the creation of an Office of the Chairman, composed currently of Sullivan and Karman, that will direct long-term policies and strategies, corporate development and corporate relations. Karman will be succeeded by Frank C. Sullivan, currently executive vice president and chief financial officer.
In other appointments: