EnerSys, a global provider of stored energy solutions, has announced a strategic realignment of its manufacturing operations aimed at improving operational efficiency and responding to a market shift towards higher performance, maintenance-free battery technologies such as Thin Plate Pure Lead (TPPL) and lithium-ion batteries. As part of this restructuring, EnerSys will shut down its flooded lead-acid battery manufacturing facility located in Monterrey, Mexico, and relocate production to its existing facility in Richmond, Kentucky.
The company anticipates a pre-tax charge of approximately $20 million related to this plan. The majority of this charge is expected to be recognized in the first half of calendar year 2025, with $7.6 million attributed to non-cash expenses from inventory and equipment write-offs. Additionally, cash charges totaling $12.4 million will cover severance, decommissioning, cleanup of the Monterrey facility, contractual releases, and legal expenses. Concurrently, EnerSys plans to invest $4.5 million to enhance flooded lead battery production capacity at its Bielsko-Biala, Poland facility. This expansion will provide extra capacity in Europe to accommodate potential demand increases and offer redundant capacity for added flexibility.
“The closure of our Monterrey facility and the transition of production to Richmond, KY will enable us to optimize our cost structure, maximize near-term IRC 45X tax benefits, and mitigate future risks associated with potential tariffs while reinforcing our commitment to strengthen domestic industrial security,” said Shawn O’Connell, Chief Operating Officer at EnerSys, who will assume the role of CEO in May. “It’s also a testament to the success of our maintenance-free conversion journey, which continues to strengthen our position as the market shifts toward higher performance, lower maintenance energy solutions.”
The restructuring initiative is projected to generate an estimated pre-tax benefit of $19 million annually starting in fiscal year 2027. This move aims to ensure ongoing product availability and robust customer support while optimizing the company’s cost structure.
EnerSys has emphasized its commitment to maintaining service continuity for its customers throughout the transition process. The company will collaborate closely with employees, customers, and other stakeholders to ensure a smooth transition in production and supply chain logistics.
Source: Business Wire
