A year after opening its 180-press injection molding plant in Northern Ireland to produce jewel boxes for the compact disc industry, Benelux Group has laid off about one-third of its 270 workers at the Limvady plant. Benelux is a global manufacturer of CD jewel boxes, and components and cassettes for various audio, video and computer products. Al Patillo, director of sales and marketing for Benelux USA Inc. in Peachtree City, Ga., said several factors led to the layoffs, including a slump in demand for jewel boxes in the European market that followed close on the heels of the high costs of starting up the huge operation.
``Pricing has eroded, inventory levels are running high and everyone is trying to get a piece of the market,'' said Patillo, who added that he expects the market to bounce back, but not as fast as anticipated.
The Northern Ireland plant produces jewel boxes for U.S. and European markets. Its capacity is 20 million jewel boxes per month.
Patillo said the company is suffering from a cash-flow crunch. Benelux is part of Hong Kong-based Benelux International, which in recent months has been looking to merge with another Hong Kong-based company, Han-nay Magnetic. However, talks between the firms broke down.
Patillo said negotiations with another investor are going ``extremely well,'' and an an-nouncement will be made within two weeks.
U.S. jewel box manufacturers confirmed that competition remains stiff, causing erosion of profit margins.
Some manufacturers blame inexpensive, imported boxes. Vic Flores, president of Filam Nation-al Plastics Inc. in Gardena, Calif., said lower prices for polystyrene in the Pacific Rim creates an unfair market advantage for foreign jewel box makers.
Filam manufactures and distributes CD jewel boxes, video and audio cassettes and soft poly-boxes.
However, as Benelux's situation indicates, foreign manufacturers are not immune from the market crunch.
``In 1994 and 1995, we were selling everything we could produce and took all the jewel boxes we could get out hands on,'' said Rushton T. Capers, vice president of Disc Manufacturing Inc. in Wilmington, Del.
During those two years, several companies such as Benelux began operating, and there is now excess capacity.
Gene Hull, executive vice president of International Packaging Corp. in Fort Wayne, Ind., agreed with Flores about the continued competitive nature of the jewel box market.
``However, we have good expectations for the future,'' he said.
Hull added that he expects to see a shakeout in the jewel box manufacturing industry, leaving it with ``five or six major players'' that will supply the U.S. market.