Gehl Company is discontinuing the manufacturing and distribution of its agricultural implement product lines.
The company’s West Bend, WI, agricultural implement manufacturing operations will permanently close following the wind down of operations by the end of May.
The product line discontinuation is expected to result in an after-tax charge to the company’s 2006 earnings of approximately $9.5 million, or 76 cents per fully diluted share. The after-tax charge is comprised of an $8.1 million non-cash asset impairment charge, related to inventory and fixed assets, and a $1.4 million cash charge related to severance and other employee costs.
The company anticipates a reduction in employee headcount of approximately 140 individuals to match the decline in manufacturing and administrative activities associated with its agricultural implement product lines. The location of the company’s corporate headquarters in West Bend will not be impacted by this action.
“Over the last 20 years, there has been a continuous consolidation occurring in the U.S. dairy industry. Many of our small dairy farmer customers have either retired or sold their operations to larger producers. Consequently, the customer base for our agricultural implement lines has declined dramatically,” said William D. Gehl, Gehl Company chairman and CEO. “The decision to discontinue the agricultural implement product lines is a response to the ongoing reduction of the company’s traditional dairy farmer customer base and the resultant decline in the company’s sales and earnings of its implement product lines.”
Gehl went on to say, “Although we are eliminating our agricultural implement product lines, we remain fully committed to our agricultural equipment dealers and customers through our continuing supply of compact equipment and ongoing parts and service support for the ag implement product lines.”
“During the past decade, Gehl Company has developed its compact equipment product lines to adapt to the changes in the agricultural marketplace,” Gehl said. “We have been proactive by introducing a new expanded line of skid loaders, including the largest in the industry, along with track loaders, compact excavators, all-wheel steer loaders and the CT series telescopic handlers, which are all well suited for the agricultural customer of today and tomorrow. The evolution of our business focus on the growing market for compact equipment is evidenced by the fact that over 90 percent of our 2005 sales were compact equipment related.”
Gehl concluded by saying, “While our product line focus has changed, our ongoing commitment to serve and grow the agricultural market is as strong today as it has ever been in the 147 year history of the company.”
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