Foamex 'stronger and more stable'
By Liz White, contributing editorLinwood, Pennsylvania-Following a tough year, during which it has closed manufacturing operations, lowered operating expenses, and replaced its chariman, Foamex International Inc. says it is poised to produce a “stronger more stable business.” In addition, the major US foam-making group is evaluating the potential for setting up a foam joint venture or strategic alliance in China, said Tom Chorman, its president and chief executive officer, during a 2 March webcast on the firm’s 2003 results.Despite the “difficult operating conditions [in 2003, Foamex] has taken great strides to stabilise its business operations,” Chorman claimed. The firm’s fourth-quarter results-which saw the fourth period of gross margin growth-show the “results of the profit-restoration plan started a little over a year ago,” he added. This margin improvement was driven by “cost-reduction efforts and a determination to recover raw material cost increases in higher selling prices,” the Foamex chief continued. Chorman cited “the extraordinary increase in chemical costs in the second half of 2003” as a major factor in the group’s current approach to managing raw materials costs. This strategy focuses on “partnership with key suppliers to lower joint supply chain costs, identifying alternative sources for supply of key materials, and locking in prices wherever possible,” he said. Bulk purchasing will also be important, Chorman continued. Another aim is to pass these higher costs on to customers in higher product selling prices, and Foamex has had some success here, the Foamex chief added. As a result of its efforts in restructuring, in reducing labour and overhead costs, in terms of both manufacturing and administration, Chorman said “manufacturing operations are now at appropriate scale to Foamex.” The firm also aims to exploit its foam expertise by enter new markets for higher added-value products with better margins, he continued, citing a new foam mattress launched late last year, which is vacuum packed and designed to be carried home from stores and self-installed by customers. “