Armstrong World Industries intends to make sweeping changes to its underachieving European resilient flooring business.
The overhaul, which is likely to include plant closings, was disclosed by Armstrong chief executive officer Michael D. Lockhart in a conference call with Wall Street analysts.
Lockhart said Friday the business "had a difficult first quarter and will likely continue to be challenged through the year. We're not happy. ..."
Though he acknowledged that "some market issues" are contributing to the downturn, Lockhart said "...our poor performance is largely the result of structural problems."
He identified these problems as production costs and selling, general and administrative expenses.
In response to the situation, "We're committed to develop a ... plan to address these issues and to begin implementation of this plan by year-end."
Lockhart said that although Armstrong is "actively evaluating many different options," the plan is "likely to involve a mix" of steps.
These include plant closures, plant investment, outsourcing administrative work and having products made for Armstrong by other manufacturers, he told the analysts.
That last step could help Armstrong replace the residential and commercial production of sites that get closed, Lockhart said.
Whether the company's Lancaster residential flooring plant might pick up any of that lost output is not known. A company spokeswoman could not be reached by presstime today for comment on Lockhart's remarks.
Lockhart did not estimate the cost of the plan or how many workers might be affected.
He did say it would take until 2010 for the "real significant benefits" to take hold "because of the time it takes to close plants."
Armstrong has five resilient flooring plants in Europe, according to its Web site: two in England, two in Germany and one in Sweden. The number of workers in those plants was not available.
Lockhart made his comments during a conference call to discuss Armstrong's first quarter financial results, which were released Friday.
Armstrong's net profits overall fell 41.5 percent in the period. Its resilient flooring division, including its European business, posted an operating loss of $7.2 million, compared to an operating profit of $10.8 million in the 2007 quarter.
Staff writer Tim Mekeel can be reached at tmekeel@LNPnews.com or 481-6030.
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