After evaluating many of the holdings it bought in the late 1990s, Tyco International Ltd. is closing four film extrusion plants and looking at more cuts.
The manufacturing conglomerate immediately is shuttering facilities in Woodland, Calif., and Thomasville, N.C., and by Feb. 8 will close plants in Mansfield, Ohio, and Fairmount, Minn., said spokesman Jay Pomeroy.
All four plants extrude polyethylene film and make a mix of garbage bags, institutional can liners, shrink film and other custom packaging. Together, the plants employ 279. The largest two, Fairmount and Thomasville, employ 97 and 80, respectively.
The closings are part of a re-evaluation Tyco announced in March and set into action in November. The company, based in Pembroke, Bermuda, but operated from Princeton, N.J., said it would close 30 plastics and adhesives plants and lay off 1,900 workers in that unit.
Tyco already had announced one closing, that of an injection molding facility in Ringtown, Pa., that makes garment hangers. That site is expected to close by year's end.
More shutdowns are coming, as the company continues its restructuring through 2004, Pomeroy said. He would not speculate on where and when those closings will occur.
While the shutdowns are painful in the short term, especially for affected employees, they ultimately will make Tyco a stronger, better-operated company, Pomeroy said. The company also is instituting supply-chain and production steps that will improve the efficiency of those plants it keeps, he said.
``There is too much capacity with this material and with these [film] products,'' Pomeroy said. ``The volumes at those plants just aren't supporting their [operations]. We're not shrinking our business, but we're forming a production strategy in our other locations that will benefit our top-line growth.''
The moves are significant in other ways, said two analysts covering Tyco who spoke on condition of anonymity. During the past decade, the company made a series of acquisitions, many of them in its film business, that did not pay off in profit, the analysts said. Those purchases also were not well-integrated within the rest of Tyco, a sprawling, $36.8 billion company that has around 70 film plants, those analysts said.
Tyco has closed several of its acquired plants during the past few years.
``Tyco made a whole bunch of roll-ups, but sucked the life out of those companies,'' said one analyst. ``They never made any kind of continuous improvement or looked at their overall footprint. Their new operational plan is to look at different facilities and move them around to maximize capacity.''
The Fairmount and Thomasville plants, which Tyco bought in 1997, were part of Carlisle Plastics Inc. The Mansfield plant, bought in 1999, was owned by Ultratech Plastics Inc., and the Woodland plant came in mid-2001 with the purchase of Woodland Poly, he said.
Tyco had attempted to sell its Plastics & Adhesives Group in early 2002, before well-chronicled internal problems forced the resignation of Tyco's top executives.
Now, Tyco is set not only on keeping those businesses but on structuring them to contribute more to earnings, Pomeroy said.
Tyco's film and sheet operations placed third on Plastics News' most recent North American ranking, with an estimated $1.1 billion in sales last year.