Tuscarora Inc. will close three manufacturing facilities during the next 90 days and shift equipment to other plants, after facing the loss of electronics business to offshore competition.
The protective packaging producer will close plants in Brenham, Texas; Hillsboro, Ore.; and Sandusky, Ohio, in June and July and reduce the company's worker count by about 60, President David O'Leary said in a May 1 telephone interview.
The ongoing softness in the electronics and high-tech sectors in North America played a key factor in a difficult decision, he said. The movement of many customers to China has fueled that downturn, he said.
``Those businesses have been off for a couple of years,'' O'Leary said. ``That is forcing us to make these cuts and eliminate capacity in markets serving those industries. We have other plants in those regions that will be able to serve those customers.''
The three plants that are closing, each between 50,000 and 100,000 square feet, had suffered through dwindling volumes and a paring of their work forces during the past two years, O'Leary said. It had reached the point where they were not generating enough critical mass to remain separate production facilities, he said.
The moves still leave the New Brighton, Pa.-based company, a leader among makers of plastic protective materials and components, with 39 plants in the United States and Mexico. Tuscarora is a division of packaging giant Svenska Cellulosa Aktiebolaget of Stockholm, Sweden.
Workers at the three plants were notified the week of April 28 of the shutdowns. Operations at the Brenham foam-molding plant will be moved to other locations in Texas, New Mexico and Oklahoma, and some of the work will be shifted to a new plant scheduled to open in July in Owosso, Mich., O'Leary said.
The integrated-materials operation in Hillsboro will be shifted to Tuscarora's nearby facility in Wilsonville, Ore. About 20 workers will relocate to the Wilsonville plant, putting employment there at 41 people.
The Sandusky facility, a thermoforming operation, will shift work to a plant in Darlington, Pa. The company will relocate several workers to Darlington, O'Leary said.
None of the three plants targeted for closure is more than 7 years old. The newest facility, in Hillsboro, started operating under the Tuscarora name in 2001. Some of the equipment from the soon-to-be-closed plants will be mothballed and earmarked for other facilities, O'Leary said.
The company's current restructuring will not affect its desire for more acquisitions this year, O'Leary said. In February, the company bought expanded-foam packager Specor Systems Inc. of Eau Claire, Wis., giving it better geographic presence in the upper Midwest.
But Tuscarora also said in February that it would close a plant in Chesaning, Mich., this summer and move operations to the new Owosso facility.
The company's employees still number about 2,000 in North America, and Tuscarora recorded 2002 sales of about $300 million, O'Leary said. The company's parent, SCA, has deep pockets and has said it would like to continue to expand in North America. In the packaging area, that could include companies that extend Tuscarora's product line or geographic reach, O'Leary said. But closing plants also has been an unpleasant fact of life, he added.
``We're still profitable, but we're not quite making our objectives,'' O'Leary said. ``We wouldn't be doing this if business was great. But we haven't seen any significant recovery yet. We, like everybody else, hope to see that in the third or fourth quarter of this year.''