Sigma Industries terminates contracts, closes Que. facility

Quebec City, Que.-based manufacturer Sigma Industries Inc. has announced that it is withdrawing from the production of certain components for the agricultural equipment and bus industries, and closing its Chesterville, Que.-based composites plant.

The company decided to terminate certain contracts due to cost overruns associated with the implementation of new technological processes at the Sigma OH facilities in Ohio, “which caused an increased amount of work to be outsourced.” The Ohio facility was formerly known as Picken Plastics, and was purchased by the company last year.

Based on agreements with its clients, Sigma redirected the production of certain components to third parties, and remaining production from the contracts will be transferred in the coming weeks. The company’s annual sales are expected to be reduced by approximately $13 million.

“Despite the resulting consequences, evidence that Sigma would not have generated the return on invested capital initially anticipated on these programs motivated our decision,” said company president and CEO Denis Bertrand in a statement.

“Nonetheless, we continue to perceive promising business opportunities in the heavy equipment and truck markets, although the latter continues to be impacted by the global economic and financial crisis. Our now-available production capacity could then be used to exploit these avenues,” he continued.

The company’s decision to cancel agricultural contracts will not affect production of farm products at Sigma’s subsidiaries. Gimli, Man.-based Faroex manufactures composite plastic parts, serving the agricultural, consumer and military industry markets. Meanwhile, St-Agapit, Que.-based PNS-Tech manufactures parts for the farming equipment sector.

Additionally, the company also announced that it would close its Chesterville, Que. composites plant. The plant currently produces composite parts for various service vehicles.

Production will be transferred to other facilities, and the company will shed nearly 15 jobs as part of the closure.