These efforts are focused on optimizing existing production capabilities and do not involve the addition of new capacity. Together, these initiatives are expected to:
- Streamline production processes and improve manufacturing cost efficiencies in Lafayette;
- Establish a strategically located, cost-leading, state-of-the-art manufacturing facility in Kentucky;
- Gain access to an expanded labor pool to meet future workforce growth needs;
- Provide manufacturing capabilities in closer proximity to new customers;
- Drive margin expansion by reducing the overall average production cost per trailer;
- Provide future opportunities to expand capacity at a lower cost point;
- Create a more profitable business model and a strengthened competitive position; and,
- Open manufacturing space in Lafayette for future growth initiatives.
"While the trailer market faces current headwinds, we are taking steps today to improve our long-term cost position," said Wabash National President and Chief Executive Officer Dick Giromini. "Even at cyclically low production levels, these initiatives are expected to favorably impact our margins. When the demand for trailers improves, as industry experts expect over the next 12-24 months, we will be positioned to take full advantage of the benefits resulting from these initiatives."
On February 28, the company received an incentive package from the state of Kentucky to build its state-of-the-art production facility. Current plans are to begin construction in late 2008 or early 2009, dependent on market conditions, with production ramp-up to begin following completion of construction. The 300,000-square-foot facility on 60 acres will have the capability to produce both DuraPlate and FreightPro dry van trailers.
Changes in Lafayette will free up additional floor space, allowing the company to consolidate warehouse space, update assembly line configurations, improve material handling processes, and take on new strategic growth initiatives
The cost of the Kentucky plant will be approximately $25 million and is expected to be financed through a combination of Industrial Revenue Bonds, lease arrangements, and operating cash flow.
The company expects to realize cost savings driven by a lower average production cost per trailer, which is expected to decrease by approximately 80-100 basis points per trailer once the changes to the Lafayette facilities are complete and the new Kentucky facility is fully operational.