Concentration of Production to Pergo’s Plant in Tr

Trelleborg, Sweden, Mar. 22--In compliance with the Swedish Co-determination Act, Pergo has decided to begin negotiations with the unions regarding concentration of production of premium products for the European market to the plant in Trelleborg. Approximately 120 persons at Pergo’s Swedish units will be made redundant as a result of this decision. Pergo intends to transfer production from Perstorp to Trelleborg, while certain new investments also will be made in Trelleborg. A reduction of Pergo’s product cost is necessary to meet the company’s long-term financial goal of an operating margin of at least 8 percent. An overview of the production structure has been under way during the winter. The work related to the European structure has now been finalized and a decision taken to initiate negotiations with the unions regarding changes within the Swedish units. The plan is to transfer major parts of the production equipment required to manufacture premium products for the European market from Perstorp to Trelleborg. In addition, the personnel demand in Perstorp will also be affected by the earlier decision to shift production to the US. A minor part of production requiring environmental permits will remain in Perstorp. In total, approximately 120 workers will be given notice, most of them in Perstorp. Some 20 people will be offered work in Trelleborg. The redundancy notices will be implemented in two stages, in which 45 persons will be given notice immediately. The timetable for the total structural change is estimated at one and a half years. Total restructuring costs are estimated to amount to approximately SEK 250 million, of which SEK 150 million pertains to the write-down of fixed assets. The costs will be charged against earnings in the first quarter of 2004. The annual effect on earnings of the decided changes is estimated at about SEK 80 million, whereof the major part will be achieved in 2006. The company will invest about SEK 80 million at the plant in Trelleborg during the coming year to meet prevailing market demands and to facilitate the structural change. SEK 55 million of the total investment is related to new production equipment.