Rubbermaid Inc.'s new cost-cutting program promises good news and bad news for its shrinking supplier base. The housewares giant may outsource more short-run production, but it also could bring more molding in-house for high-volume orders it fills continuously on a just-in-time basis, said spokeswoman Lorrie Paul Crum.
Rubbermaid announced Dec. 5 that it hopes to save about $50 million per year by trimming production and distribution costs during the next two years. It will close a Little Tikes plant in Guelph, Ontario, and eight distribution facilities, lay off about 1,200 workers, and discontinue 6,000 variations in packaging, product size and colors that account for only 5 percent of its sales.
Crum said Rubbermaid concurrently will continue reducing its supplier base, a strategy it announced in 1994. That program, although it has cut costs, has been offset by high resin prices, she said.
``We will be looking at outsourcing [molding] strategically, especially for custom orders and where flexibility is needed,'' Crum said from her firm's Wooster, Ohio, headquarters.
On the other hand, the company ``also will look at bringing more molding in-house.'' She said certain blow molded components for seasonal and office products, now sourced outside, are examples of what the firm wants to do on its own. Rubbermaid already does most of its injection, blow and rotational molding.
William Witkowski, president of Port Erie Plastics, said he did not know if Rubbermaid's cost-cutting plan will affect his business. Port Erie injection molds parts for Rubbermaid's Little Tikes division, which does most of its own rotomolding.
``Little Tikes has separate purchasingoperations,'' Witkowski said in a telephone interview.
An analyst said the cost-cutting plan ``is a move in the right direction,'' but questioned why Rubbermaid did not start it two years ago ``when it had advantages over competitors like Sterilite and Tucker.''
R. Scott Graham, an analyst with Oppenheimer & Co. of New York, expects Rubbermaid to compete more aggressively on price to mollify mass retailers and to stave off inroads made by other housewares firms.
Crum said Rubbermaid ``is on track'' in a three-year program to cut its supplier base by 80 percent to 1,500, a target it set in April 1994. Packaging and materials suppliers account for the largest number of suppliers.
Little Tikes will close its plant in Guelph by November, according to spokeswoman Leslie Mapes. The 128-employee operation rotationally molds riding toys, outdoor play houses and other large products.
Little Tikes of Hudson, Ohio, said it has overcapacity in ``northeast North America,'' where Guelph is one of three plants, but is ``challenged'' to meet demand in the southern United States, and Central and South America, the firm said in a news release. Mapes said the firm has not decided what to do with Guelph's rotomolding equipment.
Crum said Rubbermaid will move some machinery and production out of Wooster to other Home Products plants and re-configure the facility, its largest, for more focused production and distribution. Wooster will lose 300 jobs in the process. Rubbermaid also will move production of agricultural items from Commercial Products to Seasonal Products plants, but no plants are to close.
In total, Rubbermaid will take a $150 million charge in its fourth quarter for costs in the streamlining.
Meanwhile, Little Tikes will know this week if about 1,100 workers at its toy factory in Hudson will be joining the United Steelworkers of America.
Little Tikes' Hudson workers were scheduled to vote Dec. 7-8 in an election run by the National Labor Relations Board. Results of that election were not available for this story. All Little Tikes plants are nonunion.
The union already represents workers at the Rubbermaid headquarters plant in Wooster.
How the layoffs and restructuring might affect the Hudson union vote was unclear late last week. Union officials could not be reached for comment.
Mapes said she expected a unionization vote for Hudson to fail, as it did overwhelmingly in 1990.
``Being in a union doesn't mean job security,'' she said. ``About 300 jobs will be lost in Wooster, and they're unionized.''