Citing slumping demand and mounting losses, Armstrong World Industries said Thursday it will exit the residential flooring business in Europe.
As part of that decision, Armstrong said it will shut its only European residential flooring plant, in Teesside, Stockton-on-Tees, England, by early 2011.
The closing of the 163-employee plant will trigger $10 million in charges, reflecting the cost of severance for workers and asset writedowns.
Explaining the decision, Armstrong said the business had an operating loss of $4 million on sales of $19 million in the first half of this year.
Armstrong said those numbers reflect "significant reductions in demand" for its cushion-vinyl residential flooring in Europe.
Complicating matters, Armstrong said, were the small scale and high costs of the Teesside plant, which opened in 1977.
In addition, Teesside no longer needs to produce its cushion-vinyl flooring for the U.S. market.
That role now is being filled by Armstrong's Dillerville Road plant, thanks to a $25 million overhaul completed earlier this year.
The production of the fiberglass-backed residential sheet product replaces decades of production of felt-backed flooring here.
While the overhaul was part of the rationale behind closing Teesside, the far larger factors were the red ink and lower sales in Europe, said spokeswoman Beth Riley.
Exiting the residential flooring business in Europe also will free the firm to focus on its larger commercial flooring business there, she said.
Armstrong has two commercial flooring plants in Germany and one in Sweden.
Thursday's announcement comes two years after the company said it needed to overhaul its European resilient flooring business.
It also is the latest of many cutbacks unveiled by Armstrong in recent months as it strives to reduce costs to cope with weak sales.
Most recently, Armstrong said in July it will close its 150-employee ceiling plant in Beaver Falls. In May, Armstrong shut its flight operations department at Lancaster Airport.