Applied Extrusion Technologies Inc. will close two oriented polypropylene film lines at Covington, Va., cutting about 200 jobs, to improve profitability. AET said Sept. 8 the lines are older and inefficient.
``An ongoing focus on cost reduction is necessary, particularly in the face of the recent pricing pressures in the OPP films industry,'' Thomas Williams, president and chief executive officer, said in a news release.
AET will shut down the lines and move a pilot film line to its Middletown, Del., plant within six months. The changes will reduce staff levels at Covington to about 80, said Anthony Allott, the firm's chief financial officer.
AET will take a one-time charge of about $20 million in the fourth quarter as a result of the restructuring.
Two OPP lines in Covington will continue to operate. Allott would not disclose how much capacity AET will lose in the restructuring, but said the company should have enough to meet customer needs with overall market supply exceeding demand. The firm has invested in new, efficient OPP film technology, including a 33-foot-wide line in Terre Haute, Ind., and is negotiating to buy Montell NV's OPP film business.
Allott said negotiations with Montell are going well and he expects the deal to be completed early next year, as previously announced. Peabody, Mass.-based AET agreed to pay about $220 million for plants in Europe and Australia with annual capacity of about 350 million pounds and annual sales of about $200 million.
AET's Films Division is based in New Castle, Del., and its Specialty Nets and Profiles Division is in Middletown, Del. Allott said the OPP pilot line will be relocated from Covington to Middletown to make it more accessible to the nearby films research and development group. AET makes OPP films from tenter-frame and tubular processes.
The company recently fended off an unwanted takeover offer from Huntsman Packaging Corp. Allott said Sept. 9 that Huntsman had not contacted AET after the offer expired.
Allott added that consolidation could be good for the OPP films industry, despite the recent failure of Hoechst AG and Mobil Chemical Co. to finalize a joint venture.