Citing costs that have continued to escalate, Vera Bradley Inc. plans to close its New Haven, Ind., factory, its only plant in the U.S., at a cost of about 250 jobs.
The handbag and accessories firm, based in nearby Fort Wayne, Ind., plans to begin the closure in May. It has been producing at the plant since 2009 and it accounted for about 5 percent of its production.
The move won’t affect the company’s 630 associates who work in other facilities in the Fort Wayne area. Total U.S. employment is about 2,300.
Robert Wallstrom, chief executive officer, said the firm has “certainly taken pride in being able to produce a portion of our product in the U.S.”
“However,” he added, “it costs approximately 90 percent more to manufacture goods domestically than in overseas factories, and our domestic manufacturing costs have continued to rise year over year.”
Beginning in the fourth quarter of the current fiscal year, the closure is expected to result in annual cost savings of approximately $12 million.
The company decided to close the plant “after careful analysis and consideration” over the last several months, Wallstrom said.
He said the company hopes to find employment for some of the plant’s workers at other facilities in the area and would provide severance packages for those unable to find other jobs with the company.
He noted that Vera Bradley expanded both its headquarters and distribution center in Roanoke, Ind., last year. “As a company, we are working hard to grow revenues and improve our operations so that we will have even more opportunities for Indiana job growth and advancement,” the ceo stated.
The company will incur approximately $3 million in pretax charges related to the facility closure for the fourth quarter ended Jan. 31. Those results are expected to be reported Wednesday.
Additionally, pretax charges of between $6 million and $7 million are expected to be taken in the first quarter of the current year.