Low & Bonar plc said it may switch rotational molding production from its money-losing British operation to plants in mainland Europe.
Meanwhile, the London-based company, which owns North American rotomolder Bonar Plastics Inc., announced it opened a new satellite plant in Poland in July. L&B hopes to make the unit a key part of its strategy to lower its cost structure, the company announced.
Both moves are part of a far-reaching review and reorganization of L&B's plastics operations across Europe, where it runs rotomolding plants at 10 sites in seven countries.
In Britain, the company is in the midst of a three-month consultation period with the 120-strong work force at Bonar Rotaform Ltd. in Sheffield, England, over the plant's future. The facility, which relies heavily on the construction-vehicle and agricultural sectors, saw demand plummet earlier this year.
Rotaform reported a loss of £600,000 ($852,000) in the six-month period ending May 31.
The Rotaform site operates 13 rotomolding machines. L&B Finance Director Jon Kempster said the company hopes to be able to reach an agreement to maintain some production on the site.
``We could ultimately close the plant altogether and walk away from the United Kingdom. But that would not be very palatable for us. But we cannot leave the operation exactly as it is now,'' he said.
Kempster suggested that work from Rotaform could be transferred to plants in continental Europe, perhaps in France or the Netherlands, but not directly to the new unit in Poland. Nevertheless, any move in Sheffield could lead to a ``concertina effect'' on plants across Europe, he said.
L&B has seen demand slide elsewhere as well, the company revealed, when it reported first-half results. Sales slipped at PDM Molding Inc. in Littleton, Colo., although the business since has cut costs and won a $1 million contract to serve a new, large customer, L&B reported.
L&B acquired the Littleton business, which has five rotomolding machines, in March 1999 along with sister company PDM Molding NW Inc. of Vancouver, Wash.
The Littleton plant got off to a slow start last year, prompting new investment and management changes, according to L&B.
In the United States the company has seen the effects of a cost-cutting and efficiency drive at all its rotomolding plants, where it has achieved savings of about $700,000. The program involved tightening up in administration and cutting a total of about 20 jobs, Kempster said.
The new plant in Poznan, Poland, is operating two rotomolding machines, including a Rotospeed model transferred from one of L&B's German plants. By the end of September the Poznan plant will have three additional machines, according to Neil Hannah, managing director of Low & Bonar Plastics.
The 54,000-square-foot plant is starting with 15 employees but will grow to 30 by September, as it picks up business in Poland and from Western Europe that previously would have been unprofitable for L&B, Hannah said.
In reviewing its European rotomolding operations , the company aims to make changes to ensure better use of its plants, utilizing the range of molding machines to maximum effect and perhaps dedicating some sites to specific products to ensure higher volume, he said.
L&B's sales in several sectors in Europe and North America during the first six months were ``below expectations,'' according to a news release. L&B saw profit from its plastics molding operations fall to £1 million ($1.42 million) on sales that slipped slightly to £37.1 million ($53 million) from £38 million ($54 million) in the same period a year ago.
L&B also closed two small polypropylene yarn and fabric plants in the United States and Scotland in 2000. The company shifted the work to larger plants in Europe.
L&B reported a loss of £3.3 million ($4.6 million) for the first six months of 2001, down from a profit of £14 million ($20 million) for the same period in 2000. Sales overall were down from nearly £90 million ($128 million) to £86 million ($122 million).