This morning we announced plans to invest $4 million to reset our production platform over the next 60-120 days. In many ways this was an obvious decision: fully deploy the new equipment we purchased from DGI Services, LLC in a manner that allows us to produce more mail at fewer facilities. When the reset is complete we will be able to produce 30% more volume within a reduced cost structure while providing greater postal benefits to our customers. It also allows us to take advantage of available space at our Hamburg, Pa., facility and a 150,000 sq. ft. facility adjacent to our Chanhassen headquarters.
At the same time, this was a decision that was not made lightly. The reset means closing our Downey, Calif., facility and consolidating three Warminster, Pa., facilities into one. We understand our decision has an impact on the lives of the affected employees even though they will receive pay and benefits continuity, outplacement support, and in many cases the opportunity to relocate. These employees have done a tremendous job and I want to be clear that today’s announcement is not a reflection of their performance. Rather, this is a strategic move to strengthen the quality of IWCO Direct’s offering to our customers while creating greater flexibility to respond promptly to routine mail volume fluctuations. One example of this is the current market strategy shift from acquisition to customer retention programs within the financial services and insurance sectors – a shift which requires less volume.
We will be rolling out our reset plans during the next few months. As with any change to our operations, our key goal is to work closely with our customers and communicate often to ensure not only a seamless transition but to take advantage of our new, higher speed capabilities.