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April 05, 2004 02:00 AM

Acton to shift focus, outsource some work

Mike McNulty
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    Rubber mixer and product maker AirBoss of America Corp. is reorganizing its Acton Vale, Quebec, operations and will outsource manufacturing of some consumer product lines to China.

    AirBoss also will eliminate a few lines that have limited sales.

    Acton International Inc. will focus on its military products and firefighter protective wear division, which has been highly profitable in the last year. The Acton Vale-based subsidiary will expand those lines along with a few consumer products such as winter boots and overshoes for industrial applications, according to Robert L. Hagerman, AirBoss president and CEO.

    It will outsource production of other winter boot lines which will result in the sale of about $3 million worth of equipment, the largest piece being an injection molding machine, he said.

    Layoffs of some production workers are likely, Hagerman said, ``but it's difficult to put a number on it right now.'' It's possible that some personnel could shift to jobs that tie in with the manufacture of other goods at Acton Vale.

    The company is beefing up the military and firefighter products end of its business following an exceptional year in 2003 when the division's sales jumped 50 percent.

    ``Orders are on the rise and we have a lot of contracts pending,'' Hagerman said. He didn't give details on what the firm is doing to upgrade the sector.

    The executive said a three-year contract to make nuclear, biological and chemical protective footwear for the U.S. Marines kicks in at the end of April. It's one of several multimillion-dollar contracts the firm has with the military.

    Under the reorganization plan, Acton International will continue to produce several consumer boot lines that are profitable in North America, Hagerman said. The company already is importing children's boots from China, and the winter weather boots it may outsource would be marketed primarily in Canada.

    ``Our competition is mainly importing from China. We're cutting lines that don't sell particularly well and we're keeping everything that's successful,'' he said.

    In addition to producing nuclear, biological and chemical goods at the 250,000-sq.-ft. Acton Vale site, Acton International will continue its rubber mixing and calendering operations for industrial applications at the plant.

    The company's primary mixing and compounding facility is in Kitchener, Ontario, where it also molds and produces NBC protective footwear, gloves and gas mask components.

    Newcastle-based AirBoss also is looking for partners in the footwear business that already import from China but want to build a bigger base in Canada and possibly the U.S. Additionally, the company is exploring possible acquisitions, Chairman P. Grenville Schoch said during a March 10 conference call.

    The company in 2003 suffered a net loss of $3.1 million on sales that slid 3.7 percent to $125.6 million, compared with profits of $2.3 million in 2002. For the fourth quarter, AirBoss had a $4.1 million loss compared with net income of $435,670 in the 2002 period. Sales dipped 30 percent to $25 million.

    The rapid appreciation of the Canadian dollar trimmed sales by about $8.9 million for the year, the company said. In addition, results were negatively impacted by an estimated $1.8 million before taxes from exchange write-downs of U.S.-purchased inventory and annual U.S.-dollar fixed-price military contracts. Another contributing factor was rising raw material costs.

    A labor dispute at Acton Vale in November also hurt the firm's financial results. The local union turned down a mediator's proposal for a contract, and workers were locked out by the company, but ultimately signed a four-year deal, Hagerman said.

    The downturn of 2003 ended in the latter part of the year, and 2004 has started out on a positive note, Schoch said. Sales in nearly every facet of the business have improved, some segments by as much as 30 percent, Hagerman said, and he hasn't seen any signs of the trend changing.

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