HELSINKI - Nonwovens manufacturer Suominen has begun a consultation procedure aimed at permanently closing its manufacturing facility in Mozzate, Italy.
The move comes after the company determined that the lines at the plant were not best suited for sustainable fibres and this, combined with high operating costs, means that the plant is not operating competitively.
In a statement, Suominen said it will start consultation with local trade unions regarding a plan to end production at the plant during the second quarter of 2023.
The consultation will be conducted in accordance with the Italian legislation and applicable National Collective Agreement and is aimed to be completed within 90 days. The Mozzate site currently employs 92 people, working both in production and in office roles.
“Since the normalization of the COVID-induced demand surge, the competition in the European wipes nonwovens market has increased significantly driven mainly by imports from Turkey and China," said Klaus Korhonen, interim President & CEO. "This is the case especially in the traditional blended fibre products. At the same time energy costs in Italy have increased to record high levels. These two factors combined have created huge challenges for the cost competitiveness of our plant in Mozzate.”
As Suominen notes, the wipes nonwovens market is rapidly transitioning towards more sustainable alternatives and in line with its strategy, the company has set targets to increase the sales of sustainable products and to continuously innovate new environmentally friendly nonwovens.
“The demand for traditional blended fibre products in Europe is declining," Korhonen added. "Manufacturing sustainable nonwovens competitively requires production assets and processes optimized specifically for these products. Our lines at the Mozzate plant are not best suited for sustainable fibres, and this combined with high operating costs means that the plant is not competitive and its competitiveness is not expected to improve materially going forward.
"We are constantly evaluating the performance and profitability of our assets, and in the current situation we have unfortunately come to the conclusion that we need to consider closing the production at Mozzate to improve the competitiveness of our European business.”
The expected financial impacts of the potential closure are approximately €9 million in one-time cash costs in 2023-24 consisting mainly of severance costs, dismantling the production lines and restoration of leased buildings.
One-time net non-cash costs are expected to be around €3 million of which approximately €4.5 million will be posted in Q4/2022 and €-1.5 million in 2023-24 corresponding to releases of certain provisions. If implemented, the plan is expected to yield a positive EBITDA impact of approximately €3 million on an annualized basis.
