CTA Acoustics Reaffirms Plans for Corbin Plant

CORBIN, Ky., Sept. 3 -- CTA Acoustics today reaffirmed plans for its new, 350,000 square foot facility currently being completed here in Corbin, Kentucky. "Despite challenging business conditions and our tragedy earlier this year, there is no change of direction in CTA's plan," said James J. Pike, Chairman of CTA.

"We have not scaled back or stepped back from our plans to design, build, equip and operate our new state of the art plant in Corbin," said Pike.

The new plant is adding eleven new presses and seven water jet systems to 25 presses and water jet systems currently being transferred from CTA's previous Corbin facility. "We will have two state of the art form mat lines when we open and we have already integrated the facilities and infrastructure to support yet another round of presses and water jets in the future as we expand to four mat lines," said Pike. "Our new Corbin plant will set the benchmark for the acoustics industry worldwide," said Pike.

In the near term, CTA is experiencing losses of business due to the loss of a major customer. CertainTeed, a building products customer, has been purchasing materials elsewhere due to CTA's loss of production capacity following the explosion that claimed seven lives. In addition, Ford, long CTA's leading automotive customer has scaled back orders due to the difficult automotive marketplace.

"We were expecting the return of CertainTeed's business when our new plant opens later this year," said Pike. "However, CertainTeed intends to manufacture their own material in the future. Without them as a customer, our new plant will be at less than full capacity when we open.

"We are very confident that we will replace that loss with new business from major automobile manufactures and key Tier One suppliers, but there is a time lag in that type of business," said Pike.

"We are currently quoting new business for the new Corbin plant with a number of car companies, including GM, DaimlerChrysler, Nissan, Mazda and Volkswagen in addition to our long term primary customer, Ford," said Pike. "We are also quoting on new business with some of the major Tier One suppliers."

"It is significant that at a time when many companies are reducing their supplier base, CTA is being invited to quote so much new business," said Pike. "It is a reflection on CTA's long tradition of product leadership and industry best quality. We are confident that we will win a good share of that business. The problem is that many of those programs have long lead times, sometimes stretching out as much as much as 12-18 months between the time we are asked to quote and the time that production begins."

Pike noted that many of these companies are prospective new customers for CTA. "We have established a strong mid term and long term position for future business, but we are going to be squeezed in the near term until some of that new business goes into production," said Pike.

"Like many other companies in the auto industry, we are feeling the near term squeeze right now," said Pike. That "squeeze" is the reason that the company has recently offered buyouts to employees. "It is unusual for companies in this area to offer buyouts, but we felt that it was the right thing to do for our people," said Pike. Terms of the buyouts include continuing payment of wages and continuation of health care benefits for a specified term. "I wish that circumstances were different, but the current business levels won't support all of our people," said Pike.

"Our direction remains unchanged. We know that CTA has the leading products and best quality in the industry. Our new QuietBlend technology is already being nominated for industry awards. In the next year or two, we will have picked up a number of new customers and significant new business. There is no change in our commitment to Corbin. We have made the investment to build our new Corbin plant and outfit it with the best equipment available in the world to go along with our excellent workforce.

"There is an old saying in the auto industry that 'when the economy catches a cold, Detroit gets pneumonia.' For better and for worse, Corbin is now more closely linked to that same automotive economy."

Based in Madison Heights, Mich., CTA Acoustics is a privately held, full- service supplier of acoustical and thermal insulation products for the automotive industry and is the only company in its industry segment developing and producing its own materials for engine compartment, interior and industrial applications.