CooperVision, Inc. (CooperVision), the contact lens unit of The Cooper Companies, Inc. said it will discontinue the operations of its soft contact lens manufacturing plant in Norfolk, Virginia, over the next 15 months. The closing of the plant, resulting from manufacturing efficiencies gained over the last year. CooperVision will relocate lens manufacturing from Norfolk to Juana Diaz, Puerto Rico, and Hamble, UK.
CooperVision also intends to transfer part of its contact lens manufacturing operations in Adelaide, Australia, to Hamble, UK, over the coming four months. No additional hires are anticipated in Puerto Rico or the UK as part of this transition.
CooperVision’s Norfolk facility manufactures approximately 7% of its annual lens production.
Robert S. Weiss, The Cooper Companies, Inc’s president and chief executive officer, said, Our manufacturing employees are first-rate, and this is an extremely difficult decision. As we’ve said on multiple occasions, our manufacturing team has done a phenomenal job improving efficiencies, and our excess capacity is largely due to their successes. Over the past year, we have increased manufacturing throughput while reducing manufacturing headcount by roughly 685 employees. We expect these additional moves will allow us to reduce headcount by roughly 570 more employees while continuing to increase production.
As a result of the moves, CooperVision expects to recognize pre-tax restructuring charges of approximately $25 million, including approximately $6 million in fiscal Q3, $7.5M in fiscal Q4 and the remainder in fiscal 2010. CooperVision expects approximately $10 million of the charges to be cash related with minimal cash impact in fiscal 2009. Upon its completion, CooperVision anticipates annual cash savings of approximately $14 million beginning in 2011 and earnings improvements of approximately $7.5 million in fiscal 2011 and $15 million per year thereafter.