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Amcor downsizing in Australia, closing plants

By: PLASTICS NEWS REPORT

March 5, 2013

MELBOURNE, AUSTRALIA — The rising Australian dollar and cost pressures have pushed global packaging manufacturer Amcor Ltd. to shut two manufacturing sites and to downsize another site.

The company said market pressures mean the plants are now "unsustainable."

Amcor Australasia Managing Director Nigel Garrard made the announcement Feb. 18 while briefing investors on the company's half-year results for the six months ending Dec. 31.

Melbourne-based Amcor makes PET beverage containers, flexible packaging for the food and health-care markets, tobacco packaging, and corrugated boxes. It also has recycling operations.

Amcor is shutting down a Thomastown, Australia, plant that makes metal and plastic beverage closures. The company will divest its small metal closures operation and outsource plastic closures manufacturing to a third party, which a spokeswoman would not identify.

Amcor estimates it will cost A$7 million ($7.1 million) to close the Thomastown plant in mid-2013. Eighty jobs will be lost.

Amcor will downsize another facility in North Laverton, Victoria, which supplies Thomastown with decorated metal products used to manufacture metal closures. Phased downsizing will occur March through June, costing 17 jobs.

Amcor will shut a recycled cartonboard mill in Petrie, Queensland, by the end of the year, costing 220 jobs. "Due to several structural changes in the competitive environment, the mill is no longer covering its cash costs," the company said in a report to investors.

Garrard said the closures and downsizing allowed Amcor to realign its operations to the challenging conditions facing all Australian manufacturers. "The continued strength of the Australian dollar, significantly increasing cost pressures, including in areas such as energy costs, have made it impossible for these sites to remain competitive."

He said Amcor will continue to "adjust" its Australian operations. "While I regret these changes will see co-workers leave the business, we must transform our Australian operations to remain a viable business long term."