Spartan will close its fire truck body assembly facility in Ocala, Fla., at the end of 2014, and also will make additional investments to upgrade business processes and production capabilities as part of its strategic plan to improve the performance of the Emergency Response business.
Fire truck production will transition from Ocala to Spartan's Brandon, S.D., and Charlotte, Mich., facilities during the fourth quarter of 2014.
Spartan will invest approximately $5 million to strengthen processes throughout the Emergency Response business. Scalable business processes will support continuing growth by allowing Spartan to quote, design and engineer products more effectively, profitably and in higher volume. Spartan also intends to rationalize its product line and options to enhance product quality and reduce costs.
The company announced plans to close the Ocala facility after reviewing its manufacturing footprint. During the fourth quarter, Spartan will relocate fire truck production to its Brandon and Charlotte facilities. Management anticipates significant cost savings by co-locating part of its fire truck assembly operations with custom chassis production.
Spartan expects to record a pre-tax charge of approximately $2.4 million in its fourth-quarter 2014 results. This charge will cover costs of the Ocala plant closure, as well as current period expenditures for process improvement initiatives in the Emergency Response business. Management expects the consolidation plan to reduce future capital and equipment requirements, improve manufacturing flexibility and generate significant production cost advantages.
"This move is an important step to consolidate our Emergency Response segment's manufacturing base, consistent with our DRIVE strategy tenet of Integrated Operational Excellence," said John Szytkiel, President and CEO of Spartan Motors. "The success we experienced building fire trucks at Charlotte, completing the 70-unit Peru order while exceeding operational targets, reinforces our decision to leverage the capabilities of our main campus. Emergency Response is a core market for Spartan and one of great opportunity. We are concentrating our resources and investing in the future of our Emergency Response business to continue improving its operational performance and accelerate the pace of change."