Plastic and steel drum maker Russell-Stanley Holdings Inc. is closing its Allentown, Pa., plastic drum manufacturing and reconditioning operations and relocating the work to two existing locations.
The company announced May 18 that its plastic drum reconditioning services in Allentown will be integrated into its Simpsonville, S.C., facility. The Allentown manufacturing operations will be consolidated into other Russell-Stanley operations, mainly the South Brunswick, N.J., location, said Ron Aloisio, manager of marketing communications.
The company's corporate headquarters is in Bridgewater, N.J.
The transition - which should be complete by the end of the year - was motivated by a need to cut costs on the plastics side and improve service to customers outside the Northeast, Aloisio said.
Aloisio declined to provide expected cost savings from the move, other than to say they will be considerable in light of current losses generated by the company's plastics operations. He did not provide details on the losses.
The 110 employees from the Allentown operations who do not relocate to South Brunswick, Simpsonville or other facilities probably will be laid off with severance packages, Aloisio said. The Allentown plant will close by the end of the year.
The company added a 5-gallon container blow molding machine at the South Brunswick plant, the spokesman said. No other additions are expected at either Simpsonville or South Brunswick, he said.
The fact that Russell-Stanley is trimming down its plastic drum and intermediate bulk container operations is not completely indicative of the entire industry, according to observers and competitors. However, one competitor has noticed that companies that offer reconditioning services for plastic drums are either reducing services or adding fees for the service.
``It seems like the industry is re-evaluating services offered for free in the past,'' said Jerry Geyer, marketing manager for intermediate bulk containers with Greif Bros. Corp. of Delaware, Ohio.
``There are quite a few people on the reconditioning side who are reassessing their business plans and have sent out letters indicating there would be charges for services [that] customers in the past had been receiving free.''
Geyer said some of Greif's $80 million plastic container manufacturing operations have been shifted from one plant to another, but no cutbacks have been announced. Greif reported total sales of $818.8 million.
Cleveland-based market research firm Freedonia Group Inc. reported that sales of plastic bulk containers should grow about 4 percent annually, surpassing the marginal growth of steel and paperboard.
Russell-Stanley reported $275 million in 2000 sales. Including the Allentown plant, the company operates 11 plastic container blow molding plants, three steel drum plants and five reconditioning facilities for plastic and steel drums and IBCs.