Trelleborg, Sweden - Trelleborg's Wheel Systems has said it has started negotiations with unions with the aim of closing a wheel rim factory in Hadsten, Denmark. The company will open a new unit in Liepaja, Latvia to make the same products.
The new plant will open in the second quarter of 2008, while the Danish plant will close by the end of 2008, when about 70 of the 80 employees will be made redundant. An office for product development and sales will remain in the Hadsten area.
The cost of closure and production relocation from Hadsten is expected to amount to approximately SEK 25 million (â‚¬2.65 million) before tax, most of which will affect cash flow primarily during 2007 and 2008. Trelleborg plans to divest the existing property in Denmark, contributing to a short payback period for the entire project. The investment in production in Latvia amounts to approximately SEK 30 million over a two-year period.
The operation in Hadsten focuses on rims for special tyres for agricultural machines and other selected industrial segments. Rim manufacture is a niche area that supports and complements Trelleborg's sales of special tyres aimed at providing complete solutions to customers within these areas.