Volume 44, Issue 3 - March 2009

News Now

NSG Group Undergoes Restructuring Including Lay-Offs and Crushing

The board of the NSG Group announced on January 29 a series of measures to try and address the current economic downturn and improve profitability going forward. The company says its overall objective is to protect the business in the short term and also to re-establish profit growth from fiscal year 2011 onwards.

While NSG already had implemented production adjustments, lowered operational expenses and made headcount reductions in recent months, this January announcement stated “it is clear, however, that more radical measures are now required. Consequently, the NSG Group is taking further action to realign its global manufacturing sites, to reduce capacity and to reduce headcount further.”

The total investment in the approved restructuring will be $244.9 million USD (22 billion yen). The statement noted that the measures are designed to help ensure that NSG emerges from the current slump in world trade “strengthened and realigned to address future challenges and opportunities.” 

As part of its restructuring, NSG is taking steps to reduce capacity and output to match the requirements of its customers. Automotive production capacity, which was the segment most significantly affected, will be reduced in Europe and North America, and a number of other initiatives designed to align the group’s production capacity to demand also will be implemented in South America, Japan and Asia.

NSG also will reduce its float glass capacity. This will involve removing capacity equivalent to two float lines in Europe and a 15-percent reduction of float capacity elsewhere. On the company’s building products side, Roberta Steedman, communications manager for NSG’s Pilkington North America Inc., told USGlass that, to reflect lower demand, float capacity in North America will be reduced by crushing excess glass into cullet, which later can be recycled as an addition to the raw batch materials.

“After an extended crush period (approximately five weeks), our Lathrop, Calif., float plant will introduce weekend crushing from February 2009. The Laurinburg, N.C., float will begin crushing on one of its lines for two days a week over the next 15 weeks, while the line in Ottawa, Ill., will continue to operate at full load,” Steedman said.

While the company’s seasonal and temporary workforce already has been reduced, the company now is “realigning its manufacturing sites and streamlining its central functions” to implement group-wide restructuring.

As a result, the NSG Group will have reduced its overall headcount by approximately 5,800 people by March 2010. This represents around 15 percent of the total global headcount. Around 3,000 of these employees will have left the group by the end of the current financial year, which ends this month. “We have employees on layoff at the plants due to the shutdowns/ crush periods, but no plant closures are planned at this time in North America,” Steedman says. “We will be looking to rationalize staffing requirements at all levels of our business, including streamlining central functions.”

Despite Closures and Layoffs, AGC Flat Glass Says It’s Positioned to Meet Market Demands

In response to a continuing downturn in the U.S. marketplace for flat glass, AGC Flat Glass North America ceased glassmaking operations at its float glass manufacturing facility in Bridgeport, West Va. (Jerry Run), on February 9, affecting approximately 232 employees. The Jerry Run location primarily served the automotive market. In addition, the company also carried out a temporary workforce reduction of 100 employees at its pattern glass plant located in Kingsport, Tenn. (Blue Ridge). 

“While necessitated by market forces over which we have no control, we regret the effect this decision has on our Jerry Run and Blue Ridge employees, their families and the local community,” says Brad Kitterman, president and chief executive officer. “Our focus will be on helping our people.”

According to Chris Correnti, vice president, general counsel and secretary, despite these events, the company is still well positioned to meet market demands.

“We still have inventory in the Jerry Run plant that we will continue to ship as the market demands. We are also positioned to bring assets back as we need to,” Correnti says, referencing the company’s float line in Greenland, Tenn., that it shut down last April as well as its plant in Victorville, Calif., that it closed last August (see May 2008 USGlass, page 16). “As demand grows we have those other lines that we can bring back. Even in West Virginia, we have those assets that we can bring back as the market justifies the need.”

Customers should see little change in the way they place orders following the plant closing. According to Correnti, all orders are processed through a centralized order-entry system so orders now will be routed to one of the company’s other manufacturing locations. 

No changes to transportation/shipping costs are expected as a result of the plant closure.

For the 232 employees now without jobs at the West Virginia plant Correnti says they will receive their WARN pay and “there are also discussions with their union so there will likely be agreements on certain things from that.” As far as the Blue Ridge plant he says that’s a temporary layoff “and as part of that there are certain things the employees are entitled to based on their union contracts [specifics could not be disclosed]. We believe that this is truly temporary and expect the demand to pick back up enough to bring those people back as the global economy returns within the next year to 18 months,” he adds, explaining that the Blue Ridge plant serves a lot of overseas markets.

Correnti continues, “We believe we are positioned to respond to the needs of the market as we move forward. We are going to continue to focus on solar glazing as well as the residential and commercial markets and position ourselves to serve the demands of the customers.”

“Today’s volatile economic environment requires a new level of agility and flexibility for manufacturers,” Kitterman adds. “As the business environment changes, we are constantly evaluating current market conditions, the capacity and cost structure of all our facilities, and the efficiency of our transportation and logistics systems. This enables us to make the strategic decisions that position AGC for future profitability and success.”


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