Masonite Affected by Flagship Customer Loss

Losing as much as $300 million in annual sales from its now scaled-back relationship with national retailer Home Depot, Masonite International Inc. expects to close four facilities, slow production at three other sites and eliminate about 20 percent of its global workforce.

The retailer gave notice to the Mississauga, Ontario-based door producer that it would be transferring nearly all of its business in certain geographic regions to one of Masonite’s competitors. The move came after the company upped its prices in 2006.

Facing about a $250 million to $300 million loss in annualized sales, Masonite announced the permanent closure of three facilities dedicated to production for Home Depot in Toledo, Ohio, Logan Township, N.J., and Frederick, Md., as well as an interior door manufacturing facility in Mississauga, Ont. The company confirmed during its first quarter report last week that it will shut down the four locations by the end of the third quarter of 2007.

Masonite also reported that production would significantly slow at three other facilities previously dedicated to serving the Home Depot—Winchester, Va., Leominster, Mass., and Goshen, Ind.

In all, the company may eliminate about 20 percent of its 13,000 global employees. Some of the affected workers are making their own headlines; hundreds of employees and supporters staged a sit-in in Mississauga the day of the first quarter report, shutting down production in the process.

Due to the weak housing market and a significant rollback with its primary big box customer, Masonite started the year short with a $3 million first quarter loss, it reported.

“Significant weakness in new housing construction and renovation and remodeling activity in North America continued during the first quarter,” said Kenneth W. Freeman, chairman and CEO of Masonite. “Strength in our European businesses and close attention to costs globally offset the ongoing softness in North America in the quarter. Industry expectations of continuing weak North American markets, combined with our imminent loss of certain business with the Home Depot, will make it significantly more challenging to grow Operating EBITDA during the remainder of the year.”

A Window & Door Top 100 manufacturer in the more than $1 billion in annual sales category, Masonite is owned by private equity firm Kohlberg, Kravis & Roberts. It reportedly operates more than 80 manufacturing facilities and distribution sites in 18 countries in North and South America, Asia, Europe and Africa.