Avon closing one hose site, opening another in Turkey
By Liz White, ERJ staff
Bradford-on-Avon, UK-Avon Rubber plc is planning to close a European hose plant, a spokesperson for the Bradford-on-Avon-headquartered automotive and technical rubber goods maker confirmed. At the same time Avon intends to establish an automotive hose production base in Turkey, according to the firm's statement from its annual general meeting.
Avon wants to improve the balance between our capacity and demand for particular product lines,â€ in automotive hose in Europe, chairman Trevor Bonner said, in the AGM statement. Avon, which has hose plants in the Czech Republic, Portugal, Spain (2), France (2), intends to consolidate water-hose production in fewer sites, Bonner. This consolidation should, â€œfurther improve our cost base and thereby achieve better margins,â€ Bonner indicated.
Avon has started consultations with the affected site and would not reveal further details until this process has been finalised, the spokesperson said.
The group will pay an exceptional cash cost of around Â£3.6 million and expects a total charge of Â£6 million this year, including associated write-offs. Savings of around Â£3 million a year will begin to take effect during the second half of 2005, Avon added.
The producer of hose and antivibration parts is separately planning to set up an automotive hose production unit in Turkey, â€œto meet local market requirements from our international automotive customers,â€ said Bonner. Four major OEMs have plants in Turkey, and are demanding that suppliers set up operations there also to keep logistics costs down and provide low-cost parts with just in time delivery, indicated the Avon spokesperson.
Bonner referred to challenging conditions in most of the group's markets, adding that Avon has already taken actions to compensate for increased energy and raw material costs.