Velan Reduces Workforce and Announces Plans to Consolidate Production From Two of Its Plants Into One
By Marketwired News
By Marketwired News
MONTREAL, QUEBEC–(Marketwired – Sept. 15, 2015) – In the context of the downturn affecting the oil and gas industry, Velan Inc. (“Velan” or the “Company”) (TSX:VLN), a world-leading manufacturer of industrial valves, is reducing its number of employees by about 110 through a combination of temporary layoffs and elimination of certain positions in its North American facilities. The Company is also announcing plans to transfer production from one of its Montreal plants, located on Ward Avenue in Ville St-Laurent, to the plant adjacent to the head office, also located in Ville St- Laurent, thereby reducing its North American manufacturing footprint to improve operational efficiencies.
Approximately half of the employees being released are in unionized jobs and the other half are management and staff. About 75% are in Montreal, 20% in Granby, Quebec and the remainder in Williston, Vermont. Some employees will retire, some lay-offs may be temporary, and all other employees affected by this decision will be offered work transition assistance from the Company. This will reduce the Company’s global manpower by about 5%.
The Ward Avenue plant is the oldest Velan plant dating back to 1956. The process to transfer production activities from the Ward Avenue building will be phased in over a period of nine to 12 months.
It is anticipated that the overall estimated cost of the production transfer and the workforce reduction will amount to approximately US$2.5 million.
Steps taken to improve performance
“The layoffs were necessary as the result of an economic downturn that is impacting some of our important markets, especially the energy markets where the falling price of oil and the state of the global economy are creating uncertainty and affecting our bookings,” said Yves Leduc, President of Velan, “Against tough global competition, we need to become a more agile organization with a leaner cost structure. Meanwhile, in the weeks ahead, the Company and its management team will introduce a series of strategic initiatives designed to revitalize our growth and improve our operational performance.”
Tom Velan, CEO of Velan, stated, “This was a very difficult decision but, when there is a downturn in our markets and our customers have to reduce their spending, we also have to downsize. We deeply regret the impact on our employees and their families and I hope that we can assist the employees who aren’t retiring to find new jobs despite the tough economy.”
Founded in Montreal in 1950, Velan Inc. (www.velan.com) is one of the world’s leading manufacturers of industrial valves, with sales of US$456 million in the fiscal year ended February 28, 2015. The Company has manufacturing plants in 10 countries. Velan Inc. is a public company with its shares listed on the Toronto Stock Exchange under the symbol VLN.
Safe harbour statement
This news release may include forward-looking statements, which generally contain words like “should”, “believe”, “anticipate”, “plan”, “may”, “will”, “expect”, “intend”, “continue” or “estimate” or the negatives of these terms or variations of them or similar expressions, all of which are subject to risks and uncertainties, which are disclosed in the Company’s filings with the appropriate securities commissions. While these statements are based on management’s assumptions regarding historical trends, current conditions and expected future developments, as well as other factors that it believes are reasonable and appropriate in the circumstances, no forward-looking statement can be guaranteed and actual future results may differ materially from those expressed herein. The Company disclaims any intention or obligation to update or revise any forward-looking statements contained herein whether as a result of new information, future events or otherwise, except as required by the applicable securities laws. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
Chief Executive Officer
John D. Ball
Chief Financial Officer