Vaughan-Bassett to close Elkin, N.C., plant
Will affect 400 workers
Thomas Russell -- Furniture Today, 12/1/2008 12:50:36 PM
GALAX, Va. — Wood bedroom manufacturer Vaughan-Bassett plans to close its Elkin, N.C. plant in 60 days, affecting some 400 workers.The 700,000-square-foot plant, which the company has owned and operated since the 1970s, will close Jan. 30.
The facility, along with Vaughan-Bassett's main plant in Galax, Va., has operated on a three-day work week since Labor Day. The company attributed the closing to the slow economy and tight credit conditions affecting the furniture industry.
Through its fiscal third quarter ended Aug. 30, sales were down 4.4% from the same period in 2007. But conditions deteriorated in the fourth quarter, and shipments for the full year ended Nov. 26 were down about 10% from the $107.3 million recorded in fiscal 2007, the company said.
The company said it has no plans to sell the Elkin plant or its equipment, in hopes of reopening it later.
"We are in very unusual times because of this recession, particularly with the credit crunch and how that has affected big ticket items like furniture," said Doug Bassett, chief operating officer. "We do believe that one day this credit crisis will be resolved and that this recession will go away. The main point of the mothballing is to maintain the greatest possible flexibility to meet an increase in demand once the recession goes away."
The Galax plant will resume a full work schedule to meet existing demand, Bassett said. He added that Vaughan-Bassett does not plan to drop any suites it hadn't already planned to drop, and that it will continue to carry at least $30 million in finished goods inventory at its Elkin, Galax and Boonville, N.C., warehouses, to maintain product availability and delivery.
Officials said the decision to close the Elkin plant was difficult, but were optimistic that conditions will eventually improve.
"We think the recession, while it may be severe and prolonged, is not permanent," said Doug Bassett.
The company plans to apply for Trade Adjustment Act Assistance for its workers with the U.S. Department of Labor. This provides extended unemployment compensation, allowances for relocation and job search, and a health coverage tax credit. The company said it also is working with the North Carolina Employment Security Commission to provide career counseling and job referral services.
