The Bekaert Group announced that it will phase out its U.S. steel wire operations at its Shelbyville plant in Kentucky, laying off approximately a hundred employees.
A press release said that Bekaert intends to phase out the steel wire production at the plant by January 2020. The Shelbyville plant makes steel wire for various applications and markets, including the construction, consumer goods and various industrial sectors.
“External developments in demand and pricing trends have had a negative impact on the profitability and competitive position of Bekaert Shelbyville over the past years, calling for a realignment of our steel wire solutions activities in the country,” the release said. The Dramix® production line serving concrete reinforcement markets will remain in Shelbyville until a permanent location is determined.
Some of the product lines made at Shelbyville will be moved to two other U.S. Bekaert plants—Van Buren, Arkansas, and Orrville, Ohio—while others will be stopped or sourced and distributed through alternative channels. The plan is to extend the manufacturing operations in Van Buren and Orrville with the respective technology and expertise.
“Management regrets the need to implement this measure, but sees no other option to safeguard a long-term competitive position of its steel wire activities in North America,” the release said. “The business conditions have trended lower in various sectors as a result of tighter markets and continued uncertainty. Our tire markets held up well in the first nine months of 2019 but are expected to slow down in the fourth quarter as a result of the normal seasonality and destocking actions throughout the supply chain in anticipation of a continued weak business climate. The steel wire solutions activities are projected to further contract in the last quarter, mainly because of the impact of the social protest actions in Latin America, trade tariffs, and further economic slowdown globally. We do not foresee a downturn in construction markets other than the usual seasonality impact and we expect the business environment of Bridon-Bekaert Ropes Group to remain challenging.
In this scenario of economic slowdown and year-end seasonality, Bekaert continues to implement actions to offset the external headwinds, said the release, which focused on specific elements. “These actions are focused on managing cost, pricing, mix and footprint and aim to deliver an improvement of the underlying business performance. We are also further improving our working capital level and debt position and are well on track to bring our debt leverage below 2.5 by year-end.”