Furniture maker La-Z-Boy Inc. said Wednesday that it will close its plant in Tremonton, Box Elder County, this summer, putting 630 people there out of work.
The maker of the namesake living-room recliners said the closure of the Utah factory is part of a nationwide reorganization that includes moving about 1,200 U.S. manufacturing jobs to Mexico to reduce costs. The reductions come amid declining industry sales caused by the deepest housing slump in at least a quarter-century. The company's revenue dropped 7.8 percent in the quarter ended in January.
The Utah plant, which makes furniture and upholstery, will close within the next several months, the company said Wednesday in a statement.
The Monroe, Mich.-based company will transfer work at Tremonton to five remaining plants in North America that produce La-Z-Boy branded upholstery products. About 400 production positions will be added at those remaining facilities.
La-Z-Boy spokeswoman Kathy Liebmann said the Tremonton employees were notified Wednesday afternoon. She declined to comment about possible severance packages but said the company has hired an outplacement firm to assist employees with counseling, employment workshops, resume preparation, interview preparation and related services.
"La-Z-Boy has been a very important part of our economy in northern Utah for a very long time and we're sad to see them leave," Jason Perry, executive director of the Governor's Office of Economic Development, said following the company's announcement.
The company has about 8,100 employees in its upholstery division, Liebmann said. La-Z-Boy plans to begin production early next year at the Mexican facility, located in Ramos Arizpe, near Saltillo in the northern Mexican state of Coahuila.
The Tremonton plant, which at one time had more than 1,000 employees, accounts for 13 percent of the company's total upholstery manufacturing capacity and produces recliners, "motion furniture" such as reclining sofas, and stationary upholstery products.
The 675,000-square-foot plant, which opened in 1978, will be marketed for sale after it closes.
The Tremonton plant closure was one of two cost-cutting moves the company announced. The company also will move its domestic cutting and sewing operations to Mexico, affecting about 1,050 workers at five remaining plants over 18 to 24 months.
The plant closing and shift in cut-and-sew operations are expected to save the company more than $25 million annually starting in fiscal 2011, La-Z-Boy said.
Kurt L. Darrow, La-Z-Boy's president and chief executive officer, said in a news release that the decision to close the Tremonton facility was "difficult."
"We are confident this reallocation of resources, combined with the many changes we have made to our production processes, will continue to strengthen our operations," Darrow said. "We regret the impact these moves will have on the families and lives of those employees affected and greatly appreciate the contribution of each employee and thank them for their years of dedicated service."
Darrow said the move of domestic cut-and-sew operations to Mexico left the company with extra floor space at six facilities, "and with our manufacturing facilities dedicated solely to production, we determined we could service our existing and future demand with one less facility. Importantly, our remaining facilities will be able to increase their capacity utilization as a result of this change."
La-Z-Boy cut 500 jobs last year after shutting down three plants in the United States. After the Tremonton plant closes, the La-Z-Boy's upholstery segment will have a total of 5.5 million square feet of upholstery manufacturing space in North America, including 4.8 million in the United States and 700,000 square feet in Mexico.
La-Z-Boy's Upholstery Group companies are Bauhaus, England, La-Z-Boy and La-Z-Boy UK. The La-Z-Boy Casegoods Group companies are American Drew, Hammary, Kincaid and Lea.La-Z-Boy Upholstery's announcement Wednesday came after financial markets had closed. La-Z-Boy stock rose 16 cents during the day to close at $8.85 per share. During the past year, the price has ranged from $5.31 to $12.99 per share.
Contributing: Bloomberg News.