ERI to vacate its facility in Michigan
Energy Recovery Inc (ERI) is vacating the old Pump Engineering (PEI) base in Michigan, USA, where it has assembled turbochargers and pumps for desalination projects since taking over PEI in 2009.It intends to consolidate all operations at its San Leandro, California, headquarters, where its desalination energy-recovery pressure-exchangers are produced.
In an announcement on 13 July 2011, ERI said that it expected the consolidation to significantly reduce costs, improve efficiencies and enhance research and development efforts, positioning the company to experience increased profitability in subsequent years.
The company expects the move to cost around US$ 4.7 million in the current year, which includes a loss on sale of US$ 1.3 million, moving costs of US$ 0.4 million, and employee severance and other estimated transition costs of approximately US$ 1.8 million. ERI anticipates that the consolidation will generate recurring cost savings in subsequent years on the order of US$ 3.0 million, resulting mainly from reductions in headcount and other overhead expenses.
ERI expects the impact of the consolidation on cash flow to be minimal.
The announcement says that the consolidation will allow the company to streamline and accelerate its research and development plans and achieve enhanced focus on bringing new products to market.
"While we regret the impact of the plan on our Michigan employees, consolidation is the right decision for our shareholders and customers," said Thomas S Rooney, ERI's new CEO, who was appointed in February 2011.
"This is a great opportunity for the company to streamline its manufacturing operations, reduce production costs and improve its financial performance. In keeping with our corporate strategy to diversify into new strategic market segments of large addressable size, the consolidation will also allow us to accelerate the launch of next-generation products," he said.