Armstrong Mulling Plant in Mexico

Lancaster, PA, November 2, 2006--Armstrong World Industries might build its first factory south of the border, its chief executive officer says. But paying a stock dividend is not on the horizon, says Armstrong CEO Michael D. Lockhart, according to the Lancaster New Era.. The newspaper reported that Lockhart disclosed the possibility of a Mexican flooring plant in a conference call Monday with Wall Street analysts to discuss the company’s third-quarter earnings. His comment comes two years after Armstrong downsized its Lancaster floor plant, ending commercial floor making here and eliminating 450 jobs to reduce costs. During the 40-minute call, Lockhart was asked how Armstrong will use the cash generated by its operations. He replied that the firm will use its cash to pay down debt and perhaps to make acquisitions. Lockhart then continued: “We currently source a couple product lines from China that we would look at building a plant in Mexico to do.” Lockhart identified the two products as certain kinds of luxury commercial vinyl floor tile and residential floor tile made with flat-bed presses. He did not say when or where the plant might be built, or how large it might be. Armstrong spokeswoman Meg Graham said the company has not determined those specifics, or even whether to build the plant. However, Armstrong is considering replacing Chinese suppliers with its own Mexican plant in part because the shipping costs to the United States would be far lower. A maker of floors, ceilings and cabinets, Armstrong operates 41 factories in 12 countries, none in Mexico. Of those locations, 13 are resilient-flooring factories, according to Armstrong’s public filings. Besides its resilient-flooring plant in Lancaster, Armstrong has them in four states (California, Illinois, Mississippi, Oklahoma) and five foreign countries (Australia, Canada, Germany, Sweden and the U.K.). Another analyst asked Lockhart if paying a common stock dividend might be a use for the cash. “The simple facts are,” he replied, “we’re going to have cash short term. We’re going to pay down debt. We don’t have any intention of paying a dividend. And we’ll look at other ways to use the cash when we have more of it to talk about.” Armstrong emerged from a nearly six-year bankruptcy Oct. 2 as a new corporation with a new stock. Armstrong used to be part of Armstrong Holdings, which canceled its 48-cent dividend in October 2000 as the price of that stock was plunging. The action, ending 62 years of dividend payments, came five weeks before Armstrong filed for bankruptcy in December 2000.