For the second time in three months, Tredegar Corp. has announced plans to close a U.S. plant specializing in film for diaper back-sheets.
Faced with a decline in the business partly due to increased offshore production, Richmond, Va.-based Tredegar will shut down its Carbondale, Pa., facility by the end of September, said spokesman Edward Cunningham.
The company will provide a severance and outplacement package to the plant's 58 employees, who gradually will be phased out. The company still must determine the fate of the equipment for embossed cast film at the facility, Cunningham said.
``Our global customer base has meant the decline of some domestic back-sheet business,'' Cunningham said in a Jan. 17 telephone interview. ``We've been pouring more resources recently into other global facilities. We're addressing a shift that is taking place.''
The company said in October that it would close its Tacoma, Wash., diaper film facility by the end of April for the same reasons. Both operations faced stiffer competition from nonwoven laminates and from overseas plants.
Major customer Procter & Gamble Co., accounting for more than 30 percent of Tredegar's business, has moved many of its facilities outside North America.
``They have to meet P&G's needs and stay viable,'' said equity analyst Michael Beall of Richmond-based Davenport & Co, an investor in publicly held Tredegar. ``They are making an effort to optimize their facilities and run fewer of them, rather than run more of them at less-than-optimal production rates.''
With the closing, Tredegar will operate five U.S. film plants, down from eight two years ago. Its Film Products subsidiary recorded sales of $383 million in 2001 and employs about 1,100 people at sites in the United States, South America, Europe and China.
The company will take a charge of $2.9 million against fourth-quarter 2001 results related to the plant shutdown and will incur another $1.2 million in charges for the first three quarters of 2002.
Tredegar also wrote down $1.4 million in asset charges during 2001's fourth quarter for impairment of its film business in Argentina. The company operates a plant in San Juan and a sales office in Buenos Aires, Argentina. Both will remain open, but the company is monitoring the unstable economic conditions in that country, Cunningham said.
Tredegar, a maker of both plastic films and aluminum extrusions, reported sales of $767.6 million for 2001 in a Jan. 17 earnings release. Profit was $9.8 million for the year, sharply dropping from $111.4 million in 2000.
The company's film business, accounting for about half its sales, recorded better profit in 2001 than it did the year before, said Norman Scher, president and chief executive officer. The diaper back-sheet business is expected to continue its decline in 2002, and Tredegar is focusing on new products in other film areas, he said.
The company expects to spend about $30 million in 2002 to continue its global expansion and product development. Tredegar recently opened a new film plant in China, expanded a facility in Hungary and added equipment in the Netherlands.