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HVAC manufacturer Lennox International will build a new manufacturing facility for its ‘Merit’ series air conditioners and heat pumps, moving production from Marshalltown, Iowa, and Grenada, Mo., to Saltillo, Mexico. The products are manufactured under the name LII United Products.

The company will continue to manufacture furnaces, “Elite” series air conditioners and “Dave Lennox Signature Collection” products in Marshalltown, Iowa.

The three-year project is expected to break ground in the second half of 2007, according to the company, with initial production starting in the second quarter of 2008 and ramping up to full production by early 2010.

The Saltillo facility will be 300,000 square feet at a cost of $45 million. Lennox said it anticipates cost reductions of more than $13 million by 2009 and $20 million by 2010, related to production at the new facility.

“There is fierce competition for the growing business in the Sunbelt region,” said Todd Bluedorn, LII United Products CEO. “Our Merit series offering is our primary Lennox-brand product line serving the Sunbelt market, and we must produce quality products at the lowest costs to compete in that market and grow our business.”