Foamex International Inc. has begun several initiatives aimed at enhancing its profitability, increasing efficiency and cutting costs.
The activities have become part of Project Transformation, a long-term streamlining program launched in late December 2001, a company spokeswoman said. The additions are aimed at saving the company between $6 million and $8 million annually, resulting in overall yearly savings of as much as $20 million.
The latest planned moves include:
* implementation of a companywide cost reduction and efficiency program;
* price hikes on flexible polyurethane and polymer foam products;
* a review of marginally profitable accounts; and
* expansion of its raw material supply base.
The maker of flexible polyurethane and advanced polymer foam goods didn't elaborate on the changes, most of which went into effect in November.
Project Transformation started in January when Foamex announced it would close eight factories during the year and eliminate 600 from its work force, resulting in savings of about $20 million in 2002 and $30 million in 2003. The firm also said it would double its investment in research and development to $6 million during the year.
The company has been consolidating by converting production to its proprietary Variable Pressure Foaming technology. The technology allows the firm to produce no-fatigue foam goods through an efficient, emissions-free manufacturing process that cuts costs and helps spur revenue growth, the company said.
Foamex operates four VPF plants, which have more than twice the capacity of its other facilities. It plans ultimately to increase the use of the technology to a third of its remaining 56 plants within the next several years.
The Linwood-based firm also attempted to swap its GFI carpet cushion business for Leggett & Platt Inc.'s polyurethane foam assets in July. The companies couldn't reach a deal, however.
Foamex had a net loss of $7.2 million in the third quarter on a 5.4-percent decline in sales to $340.8 million. The firm will take a pretax charge against earnings of between $5 million and $9 million, including a non-cash portion of $1 million to $2 million in the fourth quarter to cover the initiatives, the spokeswoman said.
The company blamed industrywide raw material increases; one-time, non-recurring expenses related to a planned public offering of a minority interest in Foamex's Symphonex division; and expenses covering termination of the sale of its carpet cushion business for the decline in its financial results.