Milwaukee-based Rexnord Corp. has finished the closure of its Indiana bearing facility, the last step in a multi-year cost saving plan that drew the attention of President Donald Trump.
The company said during its August earnings call it was keeping the plant open longer to meet additional demand for bearings.
“We maintained certain operations in the Indiana facility well into the quarter, all of which wound down in September and have been moved to Monterrey (Mexico),” said Mark Peterson, Rexnord chief financial officer, during Thursday’s earnings call. “In total, we’ve absorbed approximately $5 million in temporary period costs during our first half that are associated with sustaining certain operations in the Indiana facility beyond the original target date in order to better the increased demand from our customers.”
Plans to close the plant drew national attention late last year after then President-elect Trump made Rexnord the target of his tweets. Todd Adams, Rexnord chief executive officer, said in February he didn’t see Trump’s policies changing the company’s plans.
But the plant has continued to receive attention, particularly as employees were asked to train their future replacements. One of those employees was the focus of a New York Times profile that said the delayed closing was the result of problems with the new plant in Mexico.
The company’s executives didn’t touch on the article or any potential problems during the earnings call. They reiterated the delay was the result of increased demand and said the benefits should begin to show up in earnings over the next two quarters.
Adams said the company’s process and motion controls business, which includes the bearing plant, has “significant margin runway” moving forward.
“We’re confident you’ll see a solid down payment on that longer-term opportunity as we move through the second half of our year,” he said.
The cost savings initiative is targeting $30 million in savings. It took place over several years and also included other plant closures and consolidations. Adams said in March he was optimistic the company would reach its savings goals.
Rexnord did increase its restructuring expense guidance to between $9 million and $12 million in the current fiscal year. The $2 million increase was primarily the result of employee severance costs, Peterson said.
Overall, the company’s net income was down 2.4 percent to $24 million and earnings declined 1 cent to 23 cents per diluted share. Revenue was up 4 percent to $510.8 million.
“We delivered another quarter of steady performance as we put a vital strategic cost reduction initiative behind us and also made important progress with our major growth and productivity initiative which is ramping up nicely,” Adams said.
