Tyco International Ltd. plans to close many of its plastics facilities, part of a larger strategy to shutter 300 plants by 2006.
Pembroke, Bermuda-based Tyco wants to shift many of its operations to low-cost regions in Southeast Asia and elsewhere, said David Robinson, outgoing president of Exeter, N.H.-based Tyco Plastics & Adhesives. He spoke in a March 13 teleconference with financial analysts in New York.
Robinson is leaving that post to become president of Tyco's fire and security division. Terry Sutter, a former top executive with both Cytec Industries Inc. and Honeywell/Allied Signal Inc., will replace Robinson this month.
Tyco's plastics operation is a leader in such areas as industrial stretch film, retail trash bags and injection molded garment hangers. The division has 74 plants and recorded about $2 million in sales last year, Robinson said. About half of those sales come from film products, he said.
Its parent company, battling cash-flow and legal issues, has decided to restructure. Chairman and Chief Executive Officer Edward Breen said Tyco will pare $1 billion in costs by closing 300 plants and reducing manufacturing space by 20 million square feet.
Details of plant closures, spread over three years, were not announced. But Robinson said the plastics and adhesives operations are high on the target list.
``This year, we've announced the closing of three facilities so far,'' Robinson said, without offering specifics. ``We have a much more ambitious plan that the team will present to [Breen] by end of this fiscal quarter.''
Last year Tyco Plastics & Adhesives closed five facilities, Robinson said. Those included a former Amcel Corp. plant in Louisville, Ky., and several former Mohawk Plastics Inc. facilities. A Tyco spokesman did not return a telephone call on deadline March 14 asking for information on more recent closings.
Tyco tried to sell the entire plastics operation a year ago, but pulled back in the wake of financial questions. The operation will stay in Tyco's hands for now, Robinson said.
``It's better off being part of Tyco right now because of leverage on a cross-business basis,'' he said. ``Let's face it. We were on a treadmill before, but a period of stability is not there right now.''
Tyco is coping with similar issues affecting its PE film competitors, said John Powers, executive vice president of sales and marketing for film maker AEP Industries Inc. of South Hackensack, N.J. A sharp rise in PE prices has scared many companies, and the market remains sluggish, he said.
Tyco buys about 1.7 billion pounds of resin annually, Robinson said. A 10 cent-per-pound rise means a $170 million expense, unless prices are passed to customers, he said.
