Once again facing enormous fiscal losses, tire recycler GreenMan Technologies Inc. has shut its Jackson, Ga., crumb rubber and waste wire facility, with plans to sell it.
The Jackson plant shut down at the end of December, about three months after GreenMan closed its operations in LaVergne, Tenn. With those closures, the Lynnfield-based company cut between 50 and 60 jobs, dropping employment to about 100, according to CFO Chuck Coppa.
GreenMan will delay the filing of its Form 10-KSB-detailing its financial results for the fiscal year ended Sept. 30-to the Securities and Exchange Commission for about 30 days to allow for the accounting treatment of the Jackson closure and divestiture, according to a company statement.
Because of the LaVergne and Jackson closures, plus a $2.5 million non-cash impairment loss related to the writeoff of all goodwill last Sept. 30, GreenMan expects its fiscal 2005 losses to be in the $14 million to $15 million range, according to the company. This compares with losses of $2.6 million in fiscal 2004 and $2.9 million in 2003.
The 2005 losses, though huge, involve mostly one-time charges, whereas closing the unprofitable LaVergne and Jackson facilities will save GreenMan nearly $500,000 a month from now on, Mr. Coppa said. Also, those shutdowns will allow the company to concentrate on its profitable operations in California and the Midwest, he said.
In January 2005, Mr. Coppa and GreenMan CEO Bob Davis were discussing at a teleconference how strategic purchases, facility upgrades and expansions would bring the company back into the black in fiscal 2005. Yet several factors prevented this, including spiraling costs for scrap tire hauling and changing demand from GreenMan's tire-derived fuel customers, to one-inch tire chips from two-inch to allow greater volume of TDF to coal.
GreenMan is working with its board of directors and its lenders on how to restructure operations to make them profitable again, according to Mr. Coppa.
``2006 will be a retrenchment year,'' he said. ``We need to take action to be responsive to the realities of the financial situation. Our board has given us the direction we will take.''
As for the divestiture of the Jackson plant, GreenMan is talking to multiple potential buyers, Mr. Coppa said.