Clorox Co. plans to close a 45-year-old factory in Cartersville, Ga., that makes Glad food-storage bags and trash bags, cutting 385 jobs.
Gerald Johnston, president and chief executive officer, announced closing during an Aug. 5 conference call after Clorox released its fiscal-year 2004 results. The day before, the company had informed members of Local 3-1503 of PACE - the Paper, Allied-Industrial, Chemical & Energy Workers International Union.
Clorox intends to close the plant by next June, contingent on negotiations with the union, which represents about 350 workers.
Oakland, Calif.-based Clorox bought Glad when it acquired First Brands Corp. in 1999. The deal almost doubled Clorox's size overnight, but Johnston said it moved Clorox into some household product categories with lower profit margins, long lead times for innovations and heavy capital costs.
In the conference call, Johnston called Cartersville ``the least efficient of our Glad network.'' The factory makes Glad food-storage bags, Glad trash bags and Gladware food containers.
Clorox's fiscal 2004 ends June 30. Clorox took an $11 million fourth-quarter charge to transfer production of some Glad products to third-party manufacturers - but a company spokesman said those moves have been limited and do not signal a major restructuring at Glad.
Johnston told analysts that outsourcing some products, including Glad food-storage and sandwich bags, is part of a plan to cut manufacturing costs by shifting work to more-efficient contract manufacturers. Asked by an analyst what types of products will be shifted out, Johnston said: ``It's what I call the stuff that takes a lot of time for changeovers, that costs money in a big operating plant.''
Clorox will use the savings to develop innovative, new products that will boost sales. Johnston listed some of these ``game-changing'' products such as Glad's Press 'n Seal sealable plastic wrap; the Clorox ToiletWand disposable toilet cleaning system; and the ForceFlex trash bags, just now coming to stores. ForceFlex bags use a special diamond texture that stretches and resists punctures and rips.
However, Clorox spokesman Dan Staublin said the Cartersville plant closing does not reflect the outsourcing plan. The vast majority of products made in Cartersville will go to other North America plants, large operations in Amherst, Va., and Rogers, Ark., and a smaller plant in Orangeville, Ontario.
Staublin said that only about 10 percent of Glad products are made by outside companies - these are open-mouth and zipper-style food-storage bags and some regular trash bags. The outsourcing involves items for the Canadian market, he said.
Meanwhile, in Cartersville, union officials want a chance to keep the plant open, said Gary Boston, the president of PACE Local 3-1503 for the last 14 years.
``Overall, the working relationship with the company has been very good,'' he said.
The union already is preparing for a plant closing, however. PACE issued a statement saying: ``The union is willing to work with the company to negotiate a shutdown settlement that would be beneficial to the workers and the community.'' Boston said the union will seek retraining and unemployment help from the Georgia Department of Labor.
Boston said the Glad factory, which opened in 1959, makes plastic film and converts it into finished bags.
Clorox makes a large number of consumer products, including Kingsford charcoal, Hidden Valley salad dressings, KC Masterpiece barbecue sauce and Scoop Away cat litter.
Johnston said the strategy of new products to drive sales growth, coupled with streamlined manufacturing and cost cutting, is paying off. Clorox reported fiscal 2004 sales of $4.32 billion, up 4 percent from $4.14 billion in 2003. Profit reached $549 million - an 11 percent increase from 2003 profit of $493 million.