Faced with steep resin price increases and weak markets, Rubbermaid Inc.'s Home Products Division has brought in-house an undisclosed amount of its former outside injection molding work. ``It increases productivity to help offset resin price increases,'' said Rubbermaid spokeswoman Lorrie Paul Crum.
She would not disclose types of components the division pulled from outside molders but said such work has been added at several of its North American plants.
The division has used a mix of captively molded components as well as parts sourced from custom firms.
Crum said the division's materials costs, mainly plastic resins, were up $125 million - 100 percent - in the first six months of the year. It has partly offset that with a $60 million productivity improvement, including repatriation of molding work, and by boosting prices to its customers by a total of $50 million.
Not included in the productivity gainsis elimination of 163 salaried jobs that Rubbermaid's Home Products Division announced June 21, Crum said in a telephone interview from her firm's Wooster, Ohio, head office.
Crum stressed that no manufacturing jobs are affected by the cutbacks and no manufacturing plant will curtail operations. Bringing more molding work in-house ``provides a safety net for workers,'' she said. Allocating molding jobs is a flexible process and a response to orders to keep inventory low, she added.
The Home Products Division began bringing molding in-house early this year. Crum would not disclose molders affected by the move or how much work still is handled by outside vendors.
Rubbermaid has predicted lower earnings for its second quarter because of high materials costs and soft consumer spending.
An analyst said Rubbermaid has had a hard time pushing its prices up for retailers and has lost marketing momentum during these tough negotiations.
``Buyers are very resistant,'' said Robert Craig with Kemper Securities of Cleveland. ``They haven't had to deal with major price increases in years.''
``Competitors lagged our price increases and we lost shelf space,'' Crum said.
Craig said Rubbermaid's competitors undoubtedly also are feeling the pinch from high plastics prices.
Officials at major competitor Tupperware were unavailable for comment. Tupperware's sales mainly bypass the retailer level and most of its sales are in Europe and Japan.
Rubbermaid's second-quarter sag follows a record three months. Despite higher costs, Rubbermaid's sales grew 15 percent to $564 million in the first quarter.
Crum said she expects product introductions, stable resin prices and productivity gains in the second half of the year to steer Home Products Division's sales back on track. She did not say if the division will send molding work back outside if sales improve.