Fletcher Building to close Spanish plant

Mark Adamson said a review had identified significant overcapacity across its two Spanish plants. Photo / Richard Robi

Fletcher Building said its subsidiary, Formica, would consolidate its operations in Spain at a one-off cost of $26 million, to be taken into its accounts for the financial year to June 30.

Formica said it would close its Bilbao plant and concentrate its manufacturing operations at its Valencia plant.

Once completed, the consolidation of two manufacturing sites into one is expected to improve pre-tax earnings in Formica Europe by about $8-9 million in the second year.

Mark Adamson, chief executive of Fletcher Building's laminates and panels division, said a review had clearly identified significant overcapacity across its two Spanish plants.

"Our volumes in Spain have decreased significantly over the past four years and it is now simply not viable to maintain and support both facilities running considerably below full capacity," Adamson, who is soon to become Fletcher Building's next chief executive, said.

Formica is in discussions with about 180 Bilbao workers and will assist them to find alternative employment, Adamson said. Some core administrative staff will remain at the Bilbao site.

Formica will retain its European production base in Valencia, along with its other facilities in Kohlo, Finland and the United Kingdom.

The Valencia facility will principally supply the domestic Spanish market and other southern European markets.

Formica's Bilbao plant has been operating for 66 years. The plant is expected to close before the end of this calendar year.

Shares in Fletcher Building last traded on Thursday at $5.93.