Trelleborg expands its presence in the Baltic region

- transfers production from Denmark to a new unit in Latvia

A decision was made to initiate negotiations concerning the relocation of Trelleborg’s production from the Trelleborg Wheel Systems unit in Hadsten, Denmark, to a new unit in Liepaja, Latvia. The unit is Trelleborg’s first in Latvia. Trelleborg already has operations in Lithuania and Estonia.

The operation in Hadsten focuses on rims for special tires for agricultural machines and other selected industrial segments. Rim manufacture is a niche area that supports and complements Trelleborg’s sales of special tires aimed at providing complete solutions to customers within these areas.

“Through this move, we will create prerequisites for the competitive manufacture of these relatively small series of special products,” says Maurizio Vischi, Business Area President, Trelleborg Wheel Systems. “Liepaja has an excellent location and a good competency base. The relocation will help to restore profitability and result in improvements in the cost structure of products of this type, which will strengthen our competitiveness.”

The investigation, which forms the basis for the decision to initiate negotiations, forecasts the gradual relocation of production to the unit in Liepaja, Latvia, during 2008. Production in Hadsten is expected to continue until the end of 2008. The start of operations at the new unit in Latvia is scheduled for the second quarter of 2008. The unit will have approximately 70 employees.

About 80 people are employed in Hadsten. A total of approximately 70 employees are affected by the closure and relocation. An office for product development and sales will remain in the Hadsten area.

In cooperation with employee representatives, work will commence to support affected employees and action programs will be planned to assist them in finding new employment, both inside and outside the Group.

The cost of closure and production relocation from Hadsten is expected to amount to approximately SEK 25 M before tax, most of which will affect cash flow primarily during 2007 and 2008. Trelleborg plans to divest the existing property in Denmark, contributing to a short payback period for the entire project. The investment in production in Latvia amounts to approximately SEK 30 M over a two-year period.