SANTERAMO IN COLLE, Italy -- Italian furniture manufacturer Natuzzi, which trades on the New York Stock Exchange (NYSE:NTZ), says it laid off 429 Italian factory workers under terms of a new contract. It had been rotating workers in shifts to avoid layoffs, but that hurt productivity.

The company says it experienced "low productivity in our Italian plants, due to the staffing of workers on a rotational basis as required by the October 2013 agreement. In March 2015, we entered into a new agreement, which has allowed us to stabilize our workforce, and that should result in improvements in productivity."

Natuzzi also manufactures in China. "Inefficiencies experienced during the first part of last year within our Chinese plant following the introduction of radical changes to our manufacturing process," Natuzzi said in an SEC filing. "These changes have led to steadily improving production trends through the first months of 2015." But it cost the firm an additional €5.2 million in "cost of sales" in 2014.

"This was due to the adoption of what we believe were certain one-off extraordinary measures that were necessary in order to meet agreed delivery times and not compromise our customer service," Natuzzi said.

Total net sales during the fourth quarter were €138.6 million, up 12.6% from the year prior period. In 2014, sales increased by 2.7% to €461.4 million.

Natuzzi says it reduced its models by 25% and the number of coverings by 38%.

"As for innovations in industrial processes, we have developed and tested in our experimental plant located in Matera a new integrated production cycle and production planning software. First tests results are very encouraging." Natuzzi production is horizontally integrated through factories in Italy, China, Brazil and Romania. The Group controls over 92% of raw materials and semi-finished products.

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