plant closing (copy)

The abrupt economic impact of the COVID-19 pandemic has hit home in Yadkin County.

Lydall Inc., the county’s third-largest private employer, said it is ramping down manufacturing and warehousing production at its Hamptonville and Yadkinville plants. It will fulfill remaining orders before closing temporarily by the end of the week.

The company said the decision means layoffs for some 500 employees in Yadkin County.

Lydall makes specialty thermal, acoustic and filtration products. The Yadkin plants serve all of the company’s domestic automobile customers.

Meanwhile, Lydall said it has instructed nearly 500 employees at plants in France and Germany “to stay home.”

Lydall said the decision was directly affected by “a number of Lydall’s largest automotive ... customers having temporarily ceased operations due to the impact of the COVID-19 pandemic on the global economy.”

Brandon Moynihan, vice president of financial planning and investor relations, said Monday that, although the temporary shutdown is planned to end March 31, “We’re going to take the shutdown day by day, dependent on the production schedules of our ... domestic customers.”

Sara Greenstein, Lydall’s president and chief executive, said in a statement the decision to temporarily close the Yadkin plants “was not made lightly. It was necessary for the sustainability of our business.”

Lydall also said in its statement that facilities in Pennsylvania also could be shut down temporarily due to a government-mandated shutdown of non-essential businesses in the state.

Those facilities produce different products than the Yadkin plants, and Moynihan said the number of layoffs in Pennsylvania has yet to be determined.

Jobless benefits

Lydall said it is offering support and resources to affected employees, including guidance on receiving unemployment insurance or other social benefits.

The affected Lydall employees will join more than 113,000 North Carolinians who filed for unemployment benefits between March 16 and 9 a.m. today.

An executive order signed by Gov. Roy Cooper allows claims to be filed by not only those who have been temporarily laid off, but also those who experienced a reduction in wages and hours or who have been furloughed.

The N.C. Division of Employment Security said at least 87% of the processed claims were COVID-19 related.

“There could be more claims related to COVID-19, in cases where the person filing did not indicate to our system that the virus was the reason for separation from employment,” Commerce spokesman David Rhoades said.

In 2016, Lydall opened an expansion to its Hamptonville campus, a 90,000-square-foot manufacturing and warehousing facility, and a 24,000-square-foot office.

At that time, it had nearly 800 employees in Yadkin, counting a distribution operation on Main Street.

Financial pressures

Lydall already was experiencing pressures.

It reported Feb. 25 that fourth-quarter sales dropped 7.9% to $193.3 million. It reported a fourth-quarter loss of $70.5 million, of which $64.2 million was related to a “write-down of goodwill.”

Goodwill arises when a company acquires another business. The amount of goodwill is the cost to purchase the business minus the fair market value of the assets and liabilities obtained in the purchase. A company typically writes down its goodwill when the value of certain assets declines.

Overall for fiscal 2019, sales were up 6.5% to $837.4 million.

At that time, Greenstein said “we have started a strategic review, which we expect to conclude by the end of the second quarter of 2020, to evaluate our portfolio and end markets. The objective is to prioritize strategic actions that optimize capital allocation and drive long-term shareholder value. “

Greenstein said Friday that “although we are dealing with an unprecedented event in terms of size, scope and scale, we are cautiously optimistic that this is a short-term crisis from which we will recover.

“While we are quickly responding to the change in demand of our automotive customers, other parts of our business remain stable. Our China operations for all three business segments are seeing an increase in orders, and a majority of our employees are back at work.

“We are confident that by making these tough and necessary decisions early on we are better positioned to navigate further uncertainties and business disruptions caused by COVID-19.”

rcraver@wsjournal.com

336-727-7376

@rcraverWSJ

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