Flexsteel Closes Plants Amid Housing Decline

Consolidation results in 250 job cuts

Furniture manufacturer Flexsteel Industries Inc. will close two manufacturing operations that have been impacted by the struggling housing market, the company said Sept. 10.

Production is scheduled to end Nov. 9 at Flexsteel's New Paris, Ind., recreational vehicle seating manufacturing facility and its Lancaster, Pa., facility where warehousing and shipping operations will continue. Products currently manufactured in the New Paris facility will move to Dubuque, Iowa, and the current Lancaster production will be transitioned to another Flexsteel manufacturing facility.

The moves will result in about 250 job cuts and an annual pretax savings of $3.5 million to $4 million. Flexsteel will incur pretax and restructuring charges in the first half of 2009 of $2 million to $2.5 million.

The weak housing market has lowered demand for the company's RV seating products and residential furniture, according to Ronald Klosterman, Flexsteel's president and CEO.

"The closure of these manufacturing facilities will more closely match our manufacturing capacity with our expected demand for residential and recreational vehicle seating products," Klosterman said in a statement. "Operations at our New Paris facility have been greatly impacted by the continued poor conditions in the recreational vehicle industry, especially for motor homes and travel trailers, which are the primary products manufactured at that facility. The demand for residential furniture products has continued to decline with the depressed housing market, the sub-prime mortgage default driven credit crisis and higher fuel costs."

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