OMNOVA Solutions (NYSE:OMN) has announced that the Company will immediately suspend production at its Taicang, China plant and consolidate production into its Shanghai, China facility, pending future improvement in business conditions.  Both facilities make coated fabrics for OMNOVA's Decorative Products business segment.  Idling of the Taicang plant is in response to weak demand in the domestic and export furniture and automotive upholstery markets, which has created excess industry capacity in the region.

"By consolidating all coated fabrics manufacturing into our well-established and larger Shanghai facility, OMNOVA will improve our capacity utilization while continuing to provide quality products and timely service to our customers in China," said Kevin McMullen, OMNOVA Solutions' Chairman and Chief Executive Officer.  "Since the production processes at both facilities are largely redundant, the transition period will be very brief.  Importantly, as the local and export markets regain momentum, our Taicang site remains an attractive option to support future growth."

The Company emphasized that the suspension of production will occur in an orderly fashion, consistent with local labor requirements and appropriate safety and environmental practices.

The idling will affect approximately 95 employees at the Taicang plant.  Some employees will have the opportunity to transfer to the Company's Shanghai facility.  "We regret that market conditions make it necessary to take this action.  We certainly appreciate and want to thank our employees for their hard work and dedicated service to OMNOVA," McMullen said.    

Annual sales from products manufactured at the Taicang plant were approximately $8 million.  Cash costs to idle the facility are estimated at $0.5 million, which will be incurred during the fourth quarter of 2011.  Cost savings from idling the plant are forecasted to be $1.2 million in 2012.

SOURCE OMNOVA Solutions