Management has closed four facilities in Europe and South Africa bringing the total down to 11 facilities. For example, the Company previously operated three separate facilities in South Africa, that have now been consolidated into the Roodepoort, South Africa facility. Further, the Company is in the process of moving the manufacturing of shanks from Mississauga, Canada to its lower cost facility in Wuxi, China. The capacity of the lower cost facilities of Wuxi, China and Wroclaw, Poland will be increased by 75% and 50%, respectively from the end of the first quarter of FY2007.
Boart Longyear has also undertaken to improve manufacturing facility throughput. A program to debottleneck all facilities has been implemented and its rollout will continue in FY2007 and FY2008. This has resulted in increased manufacturing output for all major products.
The Company now outsources the assembly of a large part of certain rigs. This provides Boart
Longyear with additional manufacturing flexibility and the ability to concentrate on other areas of the manufacturing process and reduce the labour costs necessary for the assembly of rigs.
In the long term, Boart Longyear will further review its manufacturing footprint and consider relocating more production facilities to lower cost regions such as China and Eastern Europe.
