Rubbermaid Home Products Inc. will close its injection molding plant in Goodyear, Ariz., in the next 60 days, laying off 260 workers, as part of parent Newell Rubbermaid Inc.'s plan to cut overhead.
Newell Chief Executive Officer Joe Galli also hinted that the firm will divest a large Rubbermaid unit within six months. He told analysts that the move involves a cleaning and organization product line.
The Fairlawn, Ohio, housewares major will move equipment from Goodyear to other facilities, spokeswoman Lorrie Crum said in a July 28 telephone interview. The first round of layoffs will take place in two weeks.
Rubbermaid has been cutting or outsourcing manufacturing of low-margin stock-keeping units, or SKUs.
``It's a nice plant,'' Crum said. ``It's a good-looking facility with a good workforce. When we cut those SKUs, we had more capacity than we needed. They've done great work there. We just can't fill up every plant.''
The site made products like laundry baskets, trash cans and bins.
Plant closings and bankruptcy filings have become cliche in the domestic plastics housewares sector, as struggling companies offer products that are not commoditized and negotiate their positions in an environment of overseas competition, big-box stores and high raw material prices. Newell's announcement follows several major announcements in the housewares industry, including bankruptcy filings by Laich Industries Corp. and Cornerstone Products Inc.
Housewares major Home Products International Inc. of Chicago was taken private late last year after it foundered as a publicly held entity. Meanwhile, Newell is not finished closing North American plants, officials said during a July 28 conference call announcing second-quarter results.
Galli said the company's goal is to reduce fixed assets and push more of the capital burden onto suppliers.
``This company is very much committed to achieving our best cost position in the businesses we compete in, but we still have a lot of work to do,'' he said. ``There are still too many facilities that we've got in Western Europe and North America and we still have work to do.''
Galli used Newell's capital expenditure numbers to make his point, as its spending is down $24 million in 2005.
``The sense of urgency here is quite high, and we will go as fast as we can,'' he said of cutting manufacturing costs in a three-year phase that began in 2001. ``We're committed to doing whatever's going to improve our shareholder price long term.''
He disclosed few details about the firm's intended divestiture, except that it is a $75 million Rubbermaid cleaning and organization product line, and it will take place by year's end.
``We can't give you specifics, or we already would have,'' he said. ``As soon as we get the deal closed, we'll announce it. It's yet another low-margin product line that doesn't fit our model. The divestiture of that business is pending. We're optimistic over the next six months that we'll be able to work that out.''