Transcontinental to Consolidate its Book Printing Operations in Canada
Press release from the issuing company
Montreal, April 5, 2005 – Transcontinental today announced plans to consolidate its book printing operations in Canada, with production at its Peterborough, Ontario facility ending by October 2005. The plant’s business will be transferred to other plants within its Book Group, notably in Louiseville, Quebec, where the company will also begin building a new, larger and highly-automated plant to replace the present facility. The Peterborough plant has annual revenues of about $24 million and exports over 80% of its production to the U.S. This announcement is in line with Transcontinental’s revised manufacturing strategy to further improve efficiency by investing in new technology and consolidating its network of plants. This strategy will not only modernize and streamline the company’s extensive operations, but will also counter the recent rise of the Canadian dollar. Jacques Grégoire, senior vice president of the Book Group at Transcontinental Printing — Information Products, met this afternoon with the Peterborough plant’s employees to explain the reasons and timetable for the consolidation.
“I want to stress that this decision in no way reflects the quality of work that you have done here, which is excellent,” he said to the employees. “Rather, this decision was made strictly on the basis of a sound business case to keep Transcontinental competitive, and to protect the maximum number of jobs in the company as a whole. The competitiveness of the North American marketplace has intensified as a result of Asian printers, and the strong Canadian dollar has not helped us. This decision was not easy to make, but we will live up to our reputation of being responsible and fair to our workers.”
Additional capital investment and non-recurring charge
Transcontinental’s Board of directors approved this consolidation along with an increase of $30 million in the Corporation’s 2005 capital expenditures budget. This increase includes a $20-million investment for the construction of a new 152,000-square-foot book printing plant and the installation of a state-of-the-art press and finishing equipment in Louiseville. This new equipment will replace two older presses and bindery lines and will provide greater flexibility, higher quality and increased efficiency.
The increase in the capital expenditures budget also includes $10 million toward the installation of a new press and related equipment at the Transcontinental Interweb Toronto newspaper printing plant in order to improve efficiency and print The New York Times for the Ontario and Upstate New York markets, the ten-year contract for which was announced last week by Transcontinental.
Today’s announcement will result in total non-recurring restructuring costs of $7 million before taxes, or $0.05 per share, over the next twelve months, of which about $4 million, or $0.03 per share, will be recorded in the second quarter of 2005 for severance payments and impairment of assets. The investment in Louiseville will, however, create economic value as a result of increased efficiency in the Book Group.
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