Cincinnati, OH, Sept. 30--Formica Corporation today announced that it is relocating its global headquarters from Warren, New Jersey to an as-yet-undetermined site in the Greater Cincinnati area.
The decision is part of a strategy to lower costs as Formica emerges from bankruptcy protection. "Relocating the executive suite as well as the financial, accounting, tax and legal departments from New Jersey to the Cincinnati area makes sense from an operational and historical perspective," said Formica President and Chief Executive Officer Frank A. Riddick, III. "There really was no longer any reason to be in New Jersey other than that's where some of the former corporate executives lived," said Riddick, who joined Formica two years ago. "What really makes sense for the company is to move the headquarters to the Cincinnati area. The bulk of our North American activity is in Evendale, and the company was founded in Cincinnati, so it just seemed more logical to move the headquarters to Cincinnati."
Formica officials will also be closer to one of their largest plants, a sprawling, one million-square-foot manufacturing facility in Evendale. "There are naturally occurring synergies when you get people close to each other. It aids in communication, changing the corporate culture, and all those other things we want to do," Riddick said. "I think this is very exciting for Cincinnati to get one of the most well-known companies in the world, at least from a visible, brand perspective.
"This has nothing to do with our financial restructuring, and nothing to do with the relative efficiency of one plant in North America to another, or our overall need for low-cost, efficient operations," he said.
Formica manufactures Formica, a brand of adhesives and surfacing materials used in products such as countertops, cabinets, and flooring. Its trademarked brands include Formica, Formica DecoMetal, ColorCore and FormicaSolidSurface. Formica has subsidiaries in Asia, Europe, North America, and South America. A top laminate supplier, Formica offers its products globally; North America accounts for approximately half of sales.
Riddick has led Formica management forward with a multi-million-dollar reorganization plan, spearheaded by Cerberus Capital Management LP and Oaktree Capital Management LLC. These firms, formerly two of Formica's largest holders of unsecured claims, have agreed to invest $175 million in the 90-year-old company. Formica filed for bankruptcy in March 2002. Under the company's Plan of Reorganization filed with U.S. Bankruptcy Court for the Southern District of New York, Formica will emerge with approximately $160 million in debt, compared with the $540 million on a consolidated basis when it sought court protection.
Formica has selected the Corporate Services team of Ed Schreyer and Brad Meyer from the Cincinnati office of CB Richard Ellis to represent the company in its site search for the new executive offices, which is encompassing both sides of the Ohio River.
The move is expected to be made by July 2004. Formica is seeking between 15,000 and 20,000 square feet. The new executive offices will be completely separate from the Evendale plant.
"The selection of the actual location will most likely boil down to who is more creative with the incentives necessary to attract Formica to their state," Schreyer said. "Apart from tax considerations, by moving to this area from New Jersey Formica will be able to reduce the real estate costs associated with its headquarters by about 50 percent," Schreyer added.
