Icelandic® USA, Inc, subsidiary of Icelandic Group plans to close the company’s Cambridge, Maryland production facility by year end 2007.
According to the company, the decision to close the plant is based on its ability to fill projected product manufacturing and distribution needs using the company’s Newport News, VA production facility and a newly completed distribution center also located in Newport News. Looking to the future, the closure is expected to provide critical production and distribution efficiencies.
The closing will involve estimated impairment charges of EUR 9 million associated with the Cambridge facility in Q4 2006. There will be an additional estimated restructuring charge of EUR 4 million that will be recognized in Q4 2006. The closing will result in a much improved cost structure for Icelandic®. Annual improvement in EBITDA is estimated at EUR 11 million to be fully realised in the year 2008.
The facility, which has a long history of producing some of the seafood industry’s most innovative new products, has operated on Maryland’s Eastern Shore since 1968 and employs approximately 400 people. Production will continue at current levels at least through first quarter. The closure will be phased in throughout the year.
Bjorgolfur Johannsson CEO of Icelandic Group: “The closure of the Cambridge plant is the final step in the merger of Icelandic USA and Samband of Iceland which started in the year 2005. The profitability of Icelandic operations in the USA has been low for many years and this action is necessary in order to improve it. The Cambridge plant is old and inefficient. The Newport News plant is 10 years old and much more efficient. After the closure the Newport News plant will be utilised much more which will result in significantly improved operations”.
