What’s Next for Armstrong’s Lancaster Plant?

Lancaster, PA, November 8--Armstrong World Industries took a painful step Thursday, and raised a painful question. The company announced it would end production of commercial flooring at its Lancaster floor plant, idling 450 workers. But because only a third of the sprawling plant will stay in operation, with 250 workers making residential flooring, Armstrong faces a new quandary. What happens to the rest of the property? The layoffs over the next 18 months are part of a worldwide plan by the company to revitalize its ailing vinyl flooring business, said Armstrong’s Michael D. Lockhart. Ultimately, the company expects the changes to lower the operating costs of its vinyl flooring business by $35 million annually, said Lockhart, chairman and chief executive officer. "This is a very, very substantial improvement in the profitability of the Armstrong flooring business...," he said. "That’s what made it something that we had to do." The plan will: · Move local production of commercial tile flooring to Armstrong plants in Kankakee, Ill., Jackson, Miss., and Montreal. Commercial flooring is made for offices, hospitals and schools. · Move local production of commercial sheet flooring to Armstrong plants in Bietigheim, Germany, and Braeside, Australia, and perhaps to an outside supplier. · Separate the residential flooring section of the plant, on its northwest corner, from the remainder and create a new entrance for that section. Armstrong said it will reduce its profits by $90 million, starting in this year’s fourth quarter and lasting into 2006, to reflect the cost of the downsizing here. The company also said it will invest $40 million in the other plants to ready them for the production volumes now handled in Lancaster, and $8 million in the Lancaster plant for the separation project. The money spent at the local plant, on the northern edge of the city, will give the residential flooring operation its own heating, electrical, water and other infrastructure systems, said Lockhart. Thursday’s announcement marks another staggering decline in Armstrong’s employment in Lancaster city. Opened in 1907, the floor plant on West Liberty Street employed as many as 7,600 during World War II, when it was making war materials. More recently, as many as 3,080 worked there in the early 1970s, with hundreds more next door in the corporate headquarters and, by the end of that decade, still hundreds more in a downtown office building. But in the past 15 years, Armstrong has drained most of those jobs, moving its headquarters and downtown staff to Columbia Avenue and downsizing most of the floor plant. The new round of layoffs will cut Armstrong’s city payroll by 64 percent, to 250, and its countywide payroll by 18 percent, to 2,050. Armstrong had warned floor plant employees this March that it might stop making commercial tile there, but denied that it had decided to leave just residential flooring here. When the union obtained a company document, labeled "STRAT PLAN," which portrayed that exact future, the company replied that it "only one of many scenarios" under review. Thursday, Lockhart indicated that, rather than resolve the future of just the commercial tile operation, Armstrong decided to figure out the fate of the entire floor plant 'so we could tell people with some finality that here’s what’s going to happen... "I say 'some finality' because, at the end of the day, there’s no guarantees about the residential sheet business (either). That’s going to be a function of the cost and quality of the product we produce, what our competitors do and what happens in the marketplace," he said. "The thing I can tell you is, that facility today, by dint of what the folks there have accomplished over the past two years, has the best capabilities to produce residential sheet in the world."