Packaging major Bemis closing additional plants

Bemis will close several additional plants, including a facility in Europe, as part of an expanded facility consolidation programme.

Bemis will end production at four plants in the US, France, Mexico and Brazil, and will close nine facilities altogether by the end of 2012, according to the company’s second quarter earnings report.

Bemis did not immediately return phone calls seeking information.

The company’s facility consolidation program aims to boost efficiencies and reduce fixed costs. By closing the additional plants, the company will save an estimated $50m (€39.9m) in annualised costs, up from a projected $40m (€31.9m), starting in 2013, according to the report.

According to the report, Bemis will spend approximately $141m (€112.4m) on consolidation costs, up from an estimated $84m (€67m).

Closing plants outside of the US comes with “extraordinarily higher social costs,” offering less “bang for the buck” in the short term, said Scott Ullem, vice president and chief financial officer, in the company’s second quarter earnings conference call.

“We’re doing it because it’s the right thing to do for our geographic footprint; it’s the right way to continue to capitalise the ongoing facilities we have in place,” Ullem said.

The soon-to-be closed facilities are older buildings that are in need of repairs, like new roofs or heating systems, or are in locations where the company cannot fundamentally expand, said president and CEO Henry Theisen, during the conference call.

Bemis will relocate equipment from the shuttered plants to other locations, allowing the company to maintain capacity, Theisen said, adding that the consolidation will improve Bemis’ footprint and allow them to avoid some future capital expenditures.

Bemis acquired several of the plants in 2010 when it purchased the Food Americas operations of Alcan Packaging from Rio Tinto for $1.2bn (€1bn).

The company has no plans to close additional plants in the foreseeable future, Theisen said.

“We need to get back to growing our business and get away from these unfortunate closings,” he said.

Bemis posted net sales of $1.3bn (€1.04bn) in the second quarter, a 4.2% decrease from the same period of 2011, caused in part by decreased sales in the company’s flexible packaging business and the impacts of a weaker Brazilian currency, according to the quarterly report.

The company currently operates 78 facilities in 12 countries.

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