Upper Hanover >> Quad/Graphics Inc. has announced that it will be closing its East Greenville plant in Upper Hanover by the end of the year.
The move is part of a $100 million cost reduction program announced Wednesday, and comes in response to what the company termed “challenging” third quarter financial performance.
The East Greenville plant on Gravel Pike in Upper Hanover is one of two plants slated to close. The 425,000 square-foot facility employes about 400 people and specializes in printing magazines and catalogs, according to Quad/Graphics spokeswoman Claire Ho. The second plant being closed is in Augusta, Ga., and employs about 250.
“This decision is no reflection on employees’ performance. Our Augusta and East Greenville employees have worked hard to help their plants succeed,” Ho said in an emailed response to questions about the action. “Rather, this is a strategic business decision. As a company, we continue to consolidate work into plants where we believe we can achieve the greatest manufacturing and distribution efficiencies.”
While sharing third quarter financial results on Wednesday, Quad/Graphics President and CEO Joel Quadracci said financial performance was below expectations, citing a greater than expected pullback in industry volumes and pricing pressures that accelerated during the quarter.
In fact, net sales for the period were $1.16 billion, representing a 6.5 percent decrease from the third quarter 2014.
“We are taking swift and decisive action to address the volume and pricing pressures, and are announcing a $100 million cost reduction program to bring our cost structure in line with revenues. This program includes reducing excess manufacturing capacity through plant closures, intensifying our focus on productivity, reducing SG&A costs and implementing a new streamlined organizational structure,” he said.
Ho said employees at the Upper Hanover plant were informed of the closure on Wednesday, and operations will begin to “ramp down immediately.”
“Work will be transferred to other Qaud/Graphics locations throughout the United States,” she said, including five other Pennsylvania locations.
Ho said the company values the talents and contributions of the employees impacted by the announcement.
“Quad/Graphics needs skilled, dedicated employees for job openings in a number of our plants where we are consolidating work. Therefore, Quad/Graphics will help employees who are willing to relocate take advantage of other opportunities within the company” she said. “All full-time employees who do not transfer to another Quad plant are eligible for a separation package that includes pay, extension of healthcare benefits and career outplacement assistance.”
She added that a job fair will be held next week for employees to make them aware of transfer opportunities.
“We have openings at plants where we are consolidating work. These plants are out of state and include several within Wisconsin where we are currently looking to hire 500 employees,” Ho said.
Upper Hanover Township manager Stan Seitzinger Jr. said news that the plant will close is disappointing.
“The location is a first class facility that hopefully can attract a future user. The township will discuss future use options with Montgomery County, the Upper Hanover Township Industrial Development Authority and the Upper Perkiomen Valley Chamber of Commerce,” he said.
Seitzinger added that the township is gathering information to determine what impact the loss of local service taxes and earned income taxes may have on the 2016 township budget.
“But our initial review indicates that the township has sufficient financial flexibility to handle the changes and our plan to adopt the 2016 Township budget at the same real estate tax rate for the 11th straight year remains unchanged,” he added.
Quad/Graphics is based in Sussex, Wis., and is the largest printer of magazines and catalogs in North America, with 57 plants in the U.S. and 24,000 employees worldwide. Ho said the company acquired the Upper Hanover plant in May 2014 through the company’s acquisition of Brown Printing Co.
In August, Quad/Graphics announced two other plants for closure: Loveland, Colo. (a directory printing plant) and Enfield, Conn. (a commercial and specialty printing plant). Both those facilities closed at the end of October.
To reach Business Editor Donna Rovins call 610-850-0272. Email business story ideas to drovins@pottsmerc.com
