TRELLEBORG, Sweden (June 19, 2007) — Trelleborg Wheel Systems S.p.A. has notified workers at a wheel plant in Hadsten, Denmark, it intends to close that plant and move production to a new factory in Liepaja, Latvia.
The new plant will open in the second quarter of 2008, while the Danish plant will close by year-end 2008, when about 70 of the 80 employees will be laid off. An office for product development and sales will remain in the Hadsten area, Trelleborg said.
The cost of closing and relocating production from Hadsten is expected to amount to approximately $3.6 million before tax, most of which will affect cash flow primarily during 2007 and 2008, the company said. Trelleborg plans to divest the property in Denmark, contributing to a short payback period for the entire project. The investment in production in Latvia amounts to approximately $4.3 million over a two-year period.
The operation in Hadsten focuses on rims for special tires for agricultural machines and other selected industrial segments. Rim manufacture is a niche area that supports and complements Trelleborg's sales of specialty tires aimed at providing complete solutions to customers within these areas.