Diecasting Plants Marked for Sale

Leggett & Platt Inc., a Fortune 500 company with a wide range of manufacturing subsidiaries, is changing its organizational strategy and will sell off its aluminum operations — including 14 diecasting plants, four tool-and-die shops, and two finishing and painting facilities. L&P characterizes itself as the largest independent producer of non-automotive diecastings in the U.S. The closing of Leggett & Platt’s Malvern, AR, diecaster, Precision Industries, was reported late in October. The company says it is adopting a new strategic objective, implementing a role-based portfolio management and more rigorous strategic planning, and narrowing its focus by eliminating over one-fifth of its portfolio. The goal, it says, is to increase its return on (remaining) assets, raise the amount of cash it returns to shareholders, and pursue disciplined growth. "We are making significant, necessary changes to the way we assess our portfolio of businesses, and to how we manage our asset base,” stated CEO and president David S. Haffner. “We intend to be better stewards of shareholders' capital, generate significantly more free cash, and return a larger amount of that cash to our investors. Our shareholder returns have suffered for the past few years, as part of our portfolio has dragged us down. We are correcting that by divesting several of our businesses." The Aluminum Products business unit is the largest portion of the businesses L&P intends to sell, and it will amount to a revenue reduction of approximately $900 million, according to the company’s statement. The sale is expected to be completed during 2008, and L&P projects income of about $400 million in the sale. Ultimately, 20% of Leggett & Platt’s current portfolio will be sold. It plans to reorganize its assets according to the new strategy (“Grow, Core, Fix, or Divest”), and each of the new business units will be managed according to a more rigorous strategic planning process. Leggett & Platt manufactures components for residential furniture and bedding, retail store fixtures and point of purchase displays, components for office furniture, non-automotive aluminum diecastings, drawn steel wire, automotive seat support and lumbar systems, carpet underlay, adjustable beds, and bedding industry machinery for wire forming, sewing, and quilting. Its main operations include metal stamping, forming, casting, machining, coating, welding, wire drawing, and assembly.