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Shermag Closes More Plants. Latest In Series Of Cost Cutting Measures

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Furniture maker Shermag Inc. announced Monday it will close four of its eight plants, throwing 320 workers in Quebec and New Brunswick out of a job. The affected plants are the Dudswell and Cookshire-Eaton operations in Quebec, and the Edmundston and Saint-Fran├žois-de-Madawaska facilities in New Brunswick. "Shermag's situation is part of the crisis that the Canadian manufacturing industry is dealing with," said Claude Pichette, the chairman of Shermag's board. "The effect of factors such as the continued strengthening of the Canadian dollar, the crisis of the mortgage loans in the United States and its effect on furniture sales, as well as Asian competition, force Shermag to take strict measures such as the plant closures to return to profitability as quickly as possible," he said. In an interview reported by CanadaEast Online (www.canadaeast.com), Mr. Pichette was quoted as saying, ""We are trying to find the best way to keep on with the products we have now in Canada," and, "We can't continue a long time like this... We are like a dog chasing his tail. For years we have cut and reorganized... but all the things that we did we cancelled by the increase in the Canadian dollar." In its most recent quarter, Shermag reported a $3.7-million loss and revenues of $27.2 million - down 40 per cent from a year earlier. The closure will leave Shermag with 750 employees. In 2004, it had 2,400 workers. The company has been laying off staff, closing plants and consolidating others for much of the last three years. Shermag shares rose two cents on the TSX on Monday, closing at 67 cents.

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