Suominen will start consultation with local trade unions regarding a plan to permanently close manufacturing at its Mozzate plant. According to the plan, the production would end 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. This is the case especially in the traditional blended fiber 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,” says Klaus Korhonen, interim President & CEO.
The wipes nonwovens market is rapidly transitioning towards more sustainable alternatives. In line with its strategy, Suominen has set targets to increase the sales of sustainable products and to continuously innovate new environmentally friendly nonwovens.
“The demand for traditional blended fiber products in Europe is declining. 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 fibers, 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,” Klaus Korhonen concludes.
The expected financial impacts of the potential closure are approx. EUR 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 approx. 3 million euros of which approximately 4.5 million euros will be posted in Q4/2022 and approximately -1.5 million euros 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 euros on an annualized basis.