Continuing malaise in its North American business has convinced Tupperware Corp. to curtail further its manufacturing operations in Hemingway, S.C., its last U.S. plastic molding unit.
Tupperware said Jan. 11 it will cut 250 jobs in Hemingway. The move will affect nearly half the workers there and comes less than two years after two previous layoffs. The Orlando, Fla., housewares major expects to save $6 million a year from the latest cutback.
Hemingway is best suited for high-tech production and distribution, the firm said in a U.S. Securities and Exchange Commission filing. Company spokeswoman Jane Garrard said the plant will focus on specialty housewares production such as two-color products, polycarbonate items, microwaveable products and Flat Out storage containers, a new line that can be flattened after use. Flat Out products are injection molded from a proprietary, polypropylene-based compound, Garrard said in a telephone interview.
Until recently, Hemingway supplied about 75 percent of Tupperware's production for North American markets. Most of the rest, supplied by third-party vendors, was not plastics-intensive. Garrard said it is too early to tell how much North American demand will be met under Hemingway's new production slate. Most of the plant's conventional housewares molding will move to undisclosed locations among Tupperware's 15 production plants worldwide.
Tupperware's North American sales fell about 13 percent to $38.8 million in its third quarter, ended Sept. 30. The loss for the region grew to $7.6 million, from a $6.5 million loss in the 2003 period. The firm said in a previous SEC filing that it was struggling to rebuild its North American sales force. The direct-selling force shrank partly because Tupperware tried its hand at mass retailing with in-store kiosks at Target Stores. It ended the experiment in September 2003, but it does not expect the direct sales force to begin to recover until mid-2005.
The current round of Hemingway layoffs will begin in early March. Tupperware will absorb $6.8 million in outplacement costs and $2.4 million in costs to relocate production and retire some equipment. Imports will rise to meet North American demand, but the firm expects to cut costs of carrying U.S. inventory by several million dollars a year. The Hemingway operation was established in 1976.