Masonite Closes Facilities, Aims for 10 Percent Cutback to ManufacturingMarch 15th, 2019 by Drew Vass
After a soft landing in fourth quarter 2018 among North American residential sales, officials for Masonite have confirmed with DWM magazine that the company will close three of its facilities, including those located in Denmark, S.C., Largo, Fla., and Tampa, Fla. A total of approximately 220 employees will be affected—95 in Denmark, 65 in Largo and 60 in Tampa. In an exclusive company statement provided to DWM magazine, officials report that operations across all three facilities will be served by the company’s other remaining locations.
Cutbacks to production at Masonite’s Denmark facility have already begun, officials say, with plans to close by April 15, 2019 (despite other media reports suggesting it would operate through the end of July). Contract (temporary) workers have already been released from that location. In its statement, company officials report that permanent employees continuing to work at the Denmark location have been notified that they will be paid through April 15, 2019, regardless of their actual release dates. “These individuals are also eligible for severance packages and we’ve partnered with a third-party service provider to offer outplacement and transition services,” the statement says. Employees are also encouraged to apply for other opportunities within the company’s remaining facilities.
In Tampa, “We will gradually reduce operations with final shutdown of production by late third quarter,” the statement says, while operations in Largo will scale back gradually, with a final shutdown for that facility aimed at late third quarter 2019 (around September).
While local news sources have reported that the company is decreasing its footprint along the east coast, due to reduced sales, in its statement to DWM, company officials suggest that is not the case.
“It’s accurate that we saw some weakness in the fourth quarter of 2019, across the U.S. market in total,” the statement suggests, but plant closures are, “part of a larger footprint optimization that the company has been focused on well before the fourth quarter and is not a reflection of east coast performance.”
On the contrary, officials suggest that the company has made additional investments into east-coast-based operations, including the acquisition of Bridgewater Wholesalers Inc., in November 2018, a distribution company that’s based in New Jersey serving the Mid-Atlantic and Northeastern regions. Prior to announcements for closings, officials say, “We had discussed initiatives in the U.K. to consolidate distribution and divest or exit non-core operations in that region.”
Overall, company goals include reducing manufacturing sites by 10 percent by the second half of 2020, the official statement says.
In its fourth-quarter 2018 results, Masonite International Corp. showed increases to net sales of 4 percent over 2017, from $509 million to $528 million. At the same time, net income attributable to Masonite decreased to $12 million from $72 million, including non-cash tax benefits for prior period net income totaling $51 million. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) decreased 10 percent to $57 million from $64 million.
For full-year 2018 versus full-year 2017 results, net income attributable to Masonite decreased to $93 million from $152 million, with prior period net income including non-cash tax benefits of $53 million.
Among the North American residential markets, net sales were $349 million in fourth quarter 2018—marking a 3 percent decrease over fourth quarter 2017. The company reports that those decreases were driven by an 8 percent reduction in base volume, due to “soft wholesale volumes, particularly in December, and previously announced lost retail business.”