Battered by increases in resin prices and pressures from the retail segment that won't allow it to pass on price increases, Myers Industries Inc. is taking action. The Akron-based firm is kicking out certain product lines and streamlining manufacturing plants.
The publicly held diversified manufacturer focused on improving operations during 2003, officials said during a Feb. 12 conference call to analysts and shareholders. Myers Industries makes material-handling containers and pallets; plastic storage products; plastic storage tanks and plastic planters and garden accessories via various processes including rotational molding, injection molding and vacuum forming. It is also involved in rubber processing.
``What's been involved in this is making our facilities more efficient by moving operations from our high-cost factories into our lower- cost operations and filling them up and reducing the size of our higher-cost plants,'' said John Orr, president and chief operating officer. ``In addition, we've been adding high-speed machinery and robotic contributions to many of our major facilities, moving lower- cost facilities to 24/7 operations.''
Officials did not reveal specifics. They did say, however, that about $20 million to $40 million worth of their product line could be on the line for review. During the course of 2003, prices for high density polyethylene averaged 36 percent higher compared to 2002. Now, at the start of 2004, those raw material prices still are on an upward trend.
``We're definitely culling out, especially in retail-type products where we just can't make money and we don't see the opportunity to make money no matter what we do from a cost standpoint,'' Orr said.
It's the same story throughout the plastic storage container market, where firms like Newell Rubbermaid Inc. have taken drastic measures to negotiate their positions between unpredictable resin prices and retailers that will not accept price increases.
``From a purchasing standpoint, we continue to aggregate all of our resin purchase for all the Myers companies,'' Orr said. ``This has helped dramatically over the last several years. However, we are faced again this year with the product problem of resin being up and continuing to climb in price.''
For 2004, Myers will focus on innovative, niche-oriented products, like EverKote, a patent-pending structural wood product that is coated in a plastic shell; a new line of planters; a plastic container for shipping liquid food products; and custom material-handling systems for a variety of applications.
``EverKote is manufactured using a new process we developed that molds a thick plastic shell around an engineered wood core,'' said Stephen Myers, chairman and chief executive officer.
During the fourth quarter Myers announced sales of $176.5 million, the highest of any quarter in its 69-year history. Sales for the year clocked in at $661 million.