Editor's Note: This story has been updated to include quotes from local officials.
Ethan Allen Interiors Inc. announced Wednesday that as of mid-June the plant in Old Fort will no longer make furniture and will become a distribution center. This announcement will affect approximately 325 employees.
In a news release, Ethan Allen Interiors Inc. announced Wednesday plans “to further improve its vertical integration operations” by changing operations at the 550,000-square-foot Old Fort plant. It will be converted into a “state-of-the-art distribution center to support the company's national distribution structure and growing U.S. government GSA contract business.” The lumber processing facility will be maintained, according to the news release.
Ethan Allen spokeswoman Geri Moran said to The McDowell News this will take effect on or after June 15.
The local Ethan Allen employees will be able to apply for any open positions within the company, including jobs for the new distribution operations at the Old Fort location. “When fully converted, there will be approximately 50 associates in the distribution and lumber processing operations in Old Fort,” said Moran to The McDowell News.
The Ethan Allen Pine Valley Division plant has operated in Old Fort since the early 1970s. The plant has one shift, according to Moran.
“These decisions are not easy, especially as they affect approximately 325 of our associates in Old Fort, NC and 55 associates in Passaic, N.J.,” said Farooq Kathwari, Ethan Allen’s chairman, president and CEO. “I have had a personal close association with many of these associates for about 40 years. They leave a legacy of fine artisanry, safety, and manufacturing leadership.”
Ethan Allen will consolidate U.S. case goods manufacturing to plants in Vermont. This involves consolidating approximately half of the case goods manufacturing at the Old Fort plant into the company’s case goods plants in Orleans and Beecher Falls, Vermont, which together have approximately 1 million square feet of manufacturing space, with the balance of the Old Fort manufacturing to be consolidated into the company's other case goods manufacturing plants, according to the news release.
The company’s upholstery manufacturing has previously been consolidated to the Maiden campus where there are three plants totaling 714,000 square feet. Ethan Allen is in the process of expanding the Maiden campus with the addition of 80,000 square feet at an investment of approximately $5 million.
The distribution operations at the company’s 250,000-square-feet facility in Passaic, N.J. will be moved to the operations in North Carolina and the art framing operations will be outsourced, according to the news release.
Chuck Abernathy, director of the McDowell Economic Development Association, said MEDA is in contact with the state Department of Commerce’s Rapid Response Team and the N.C. Works Office to assist these people who are about to lose their jobs.
“These offices will coordinate with local governments, the community college, other employers that have openings at this time,” said Abernathy. “Everyone will do the best they can to assist people in transitioning to other jobs or training opportunities. The unemployment rate is low and opportunities for relocating into other jobs will be as positive as they can be.”
Abernathy added McDowell has not seen a plant closing of this size since the shutdown of Jeld-Wen more than a decade ago.
Carrie Greene, manager of the local N.C. Works office, said her agency is also in the process of compiling a Rapid Response Team from the state Department of Commerce.
“There will be information about unemployment, health care and potential training at the community college,” said Greene about the team’s assistance.
Felicia Culbreath-Setzer is the regional operations director for the state Department of Commerce. She said to The McDowell News that her agency is first seeking to determine the facts about the situation.
In addition to the Rapid Response Team, there will likely be a job fair for these Ethan Allen employees.
“There are many employers in the McDowell County area that need employees,” said Culbreath-Setzer.
As a result of these initiatives, the Ethan Allen company expects to incur restructuring and other consolidation costs of approximately $7 million to $8 million, of which approximately 40% is expected to be non-cash asset impairment charges, primarily during the fourth quarter. In addition, the company will also make related capital investments of approximately $8 million, which includes the expansion in Maiden over the next 12 months. The company expects these changes will provide an opportunity to benefit gross profit by $5 million to $6 million during fiscal 2020 and beginning in fiscal 2021, after the completion of these initiatives, provide the opportunity for a 100 to 200 benefit gross profit improvement to gross margin, according to the news release.