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Viewing Durham Furniture Plans to RestructureDurham Furniture Plans to Restructure
By chadisenberg
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Durham Furniture recently announced that they have secured the protection of the court as they reorganize. The company is badly affected by the increasing value of the Canadian dollar (called the 'loonie' because of the loon displayed on one side). The increasing value of the loonie, or the Canadian dollar, is perceived by many people as great. However, for some businesses it brings about a very grim situation. Case in point is Durham Furniture, which specializes in the creation of solid wood bedroom furniture. Said company recently announced that they would be restructuring the company and that they have received court protection as they implement their restructuring plans. As part of its restructuring, the company announced that they would be closing down its assembly facility in Chesley, Ontario. They would also shut down a showroom in High Point. These actions would be taken by the company to stop further loses. It was reported that Durham Furniture will be restructuring under the Companies' Creditors Arrangement Act, which is similar in context to the United States Chapter 11 law. As part of the protection granted to Durham Furniture, the Ontario Superior Court of Justice appointed the Toronto-based accounting and consulting firm, Ernst and Young, as monitor. The reason why Durham Furniture filed for reorganization is lowered sales. This was brought on by the increasing value of the Canadian dollar. United States furniture is very important for the company. By manufacturing bedroom furniture in Canada where prices of raw materials and wages are considerably lower, they can export goods to the United States and sell them at a very high profit. However, with the loonie showing signs of increased value, the company's profits were radically reduced. Before filing for reorganization, Durham Furniture invested 38 million Canadian dollars to build a 147,000-square-foot case goods manufacturing plant. That was in 2004, but less than a year later the plan was abandoned due to the increasing value of the Canadian dollar. If the company had pushed through with the plan, they would have been stuck with a manufacturing facility that could produce as much as 1400 pieces of finished goods in a day. Durham Furniture's Chief Executive Officer Michael Pitman said that the reorganization is the best option the company had. 'This difficult decision is the best course of action given the current economic conditions and challenges', said the CEO. As part of the company's restructuring plan, it will shed about 150 jobs in its offices and manufacturing facilities. It will focus on its core operation and will consolidate manufacturing in its main plant in Durham. This scenario is not uncommon, as auto assembly facilities in the country are also suffering huge setbacks after the rise of the Canadian dollar. About the Author: It would not be surprising if a manufacturer of bird baths would also file for the same legal action. Article Source: 1st Rate Articles - http://1stRateArticles.com |
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