When Armstrong World Industries disclosed the sale of most of its foreign operations, the company stressed there’s more to its strategy than that.
The other part, the Lancaster-based maker of ceilings said last week, involves strengthening what will be its remaining business.
That’s the portion in the Americas.
And nowhere is that second step more apparent than the Armstrong ceilings plant north of Marietta along Route 441.
There, Armstrong is spending more than $50 million to install a new, state-of-the-art finishing line, according to a company spokeswoman.
The installation of the new “Flexline” won’t alter the size of the plant’s 370-employee workforce, the Armstrong spokeswoman said.
But the new line will heighten the plant’s capabilities.
The Flexline project accounts for the majority of a $100 million upgrade at Armstrong plants in Marietta, Macon, Georgia, and Hilliard, Ohio.
“Overall, these are game-changing investments that position Armstrong ahead of the competition, in terms of product capability, quality and service,” Chief Executive Officer Vic Grizzle said.
Armstrong disclosed the three-plant investment in a conference call with Wall Street analysts a day after unveiling its plan to sell nearly all of its foreign operations.
This sweeping divestiture will include the sale of its operations in Europe (including Russia), the Middle East, Africa and the Pacific Rim (including China).
The buyer is a German-based ceilings maker, Knauf International, which has agreed to pay $330 million.
Divesting these unprofitable international operations will subtract about $425 million of Armstrong’s $1.2 billion in annual sales, or roughly a third.
Grizzle told the analysts that the transaction “will complete our pivot” to a company focused on the Americas, where Armstrong is the biggest producer of ceilings.
It’s in the Americas, Grizzle said, “where we have our best position and best opportunity for profitable growth. ... We see exciting opportunities to grow and achieve returns greater than those available to us overseas.”
The divestiture is the second sizable move by Armstrong to shed businesses in less than two years. In April 2016, Armstrong spun off its flooring operations into a separate, independent company, also headquartered in Lancaster.
But not all six of the Armstrong plants that manufacture ceilings and mineral wool (the basic ingredient in Armstrong ceilings) will be part of the retooled company.
Armstrong said last week that as it adds capacity to some of its plants, it won’t need its plant in St. Helens, Oregon. That 130-employee site will close in mid 2018.
The opposite is happening at Marietta, where Armstrong is responding “to growing customer demand for customization and options” with its investment in Flexline, said spokeswoman Jennifer Johnson.
Flexline doesn’t produce the ceiling boards; Armstrong makes them elsewhere on the site. Rather, Flexline adds the finishing touches, you might say.
When it becomes fully operational in the first quarter of 2018, Flexline will replace the plant’s existing finishing line, which has lesser capabilities.
Flexline, said Johnson, “is the ‘next gen’ of this kind of technology.” It provides “more and better automation” as well as “much more advanced capability” to produce custom colors, sizing and edging.
Johnson declined to detail the cost, dimensions, capacity and other particulars of Flexline for competitive reasons.
Grizzle told the analysts that Flexline “will enable us to make custom sizes, shapes and colors of all our high-end products, all with our industry-leading edge finishing.
“These capabilities will reduce cost, reduce lead times, improve product quality and enhance the overall customer service for products at the highest end of our mineral-fiber portfolio. These new features are all specifiable attributes and will be unique in the market.
“This will strengthen our relationship with leading architects, designers and building owners, and will help us win jobs and drive the average unit value of our mineral fiber products higher,” Grizzle said.
The $100 million investment also gave the Marietta, Macon and Hilliard plants the capability to produce Armstrong’s two newly launched ceiling lines, according to the CEO.
Its Sustain line is free of chemicals and materials on the International Living Future Institute’s “red list” of dangerous substances. Its Total Acoustics line combines sound absorption and sound blocking.
“You’ve seen early returns on these investments with the successful launches” of the two lines, Grizzle told the analysts.