MELVILLE, NY -- Park Electrochemical announced its Nelco and Neltec laminates units will consolidate over the next four to six months.
The firm will take a pretax charge of $5 million to $5.5 million in connection with the changes, and expects to save up to $3.5 million a year once the consolidation is complete.
The move affects Park's Nelco Products unit located in Fullerton, CA, and its Neltec operations in Tempe, AZ. The consolidation is expected to take approximately four to six months to complete, the firm said. When completed, all manufacturing operations at NPI will cease, except for the NPI treating operation, which will continue as part and under the supervision of the Neltec Business Unit.
All manufacturing functions, including treating, lamination, prepreg paneling, finishing, inspection, quality lab and shipping and receiving, will continue at the Neltec site in Tempe. After the consolidation is complete, all business functions, including customer service, accounting, payables, receivables, production control and planning, engineering, quality, procurement, facilities management, HR and EHS, will be performed at Neltec in Tempe, Arizona. The Neltec Business Unit will continue to manufacture Park’s entire electronic materials product line.
After the consolidation is complete, the Neltec Business Unit (including the continuing treating operation in California) is expected to have ongoing manufacturing capacity equal to approximately three times the current production levels of NPI and Neltec combined.
Park expects to incur a pretax charge in connection with the consolidation of approximately $5 million to $5.5 million. This charge is expected to be incurred primarily during the first nine months of Park’s current fiscal year ended Feb. 25, 2018. In addition to this charge, Park expects to incur duplicative pretax costs of $300,000 during the same nine-month period. Once the consolidation is complete, Park expects an ongoing pretax benefit from the consolidation of approximately $3 million to $3.5 million per year.
Park Electrochemical chairman and CEO Brian Shore said, “We originally established our NPI California electronic materials manufacturing facility in 1965, and the last major expansion of that facility was completed in 2000. The facility is equipped with modern, highly automated equipment designed for high volume production of standard product. Unfortunately, in my opinion, the reality is that the market for high-volume production of standard product has almost completely migrated from North America to Asia.
"Our Neltec facility in Tempe, Arizona, which was established in 1990 and subsequently expanded in 2001, was designed and is equipped for flexibility and agility, smaller production runs and multiple fast change-overs of a diverse and varied product line. Our Neltec facility is much better equipped and suited to today’s North American electronics market, which, in my opinion, has become more of a niche market, and will become even more of a niche market in the future. These factors led to our decision to focus our North American electronics business activities and operations in the future at Neltec rather than NPI.”
He said Neltec will "embrace and welcome difficult and quirky orders and projects," with "no order too small." NPI employees will be allowed to apply for jobs with Neltec.