Disposable food container manufacturer Solo Cup Co. will lay off 3 percent of its workforce as the company continues to realign itself, following its purchase of rival Sweetheart Cup Co. in February 2004.
The reductions will trim about 400 people from the payroll, with the cuts occurring in both hourly and salaried employee ranks. The company employs about 13,000 people worldwide.
``For us it's really the last step of the integration. There's no other shoe to drop,'' President Ronald Whaley said April 13. ``It's really to slim down the organization and to put the right team in place.''
Since buying Sweetheart, Highland Park-based Solo has been consolidating plants to eliminate sites that manufactured just one or two products. Solo now operates 20 plants, 13 fewer than in the immediate aftermath of the Sweetheart purchase. With more multiproduct plants, Solo said it has improved customer service and made production more efficient.
Although the price Solo paid for Sweetheart was never disclosed, it was believed to have been around $800 million. Sweetheart is based in Owings Mills, Md. The combined company is the largest maker of plastic cups in the United States.
``The transformation has been on track and on target,'' Whaley said. The latest head-count reduction will cost the company about $4 million for severance, which will be spread out over first- and second-quarter results. The company said the layoffs eventually will save Solo $12 million a year in expenses.
Whaley said his goal is to accelerate sales in the typically slow-growing disposable container business by introducing product innovations. Profit at the privately held Solo has been held down by a combination of heavy interest payments, which totaled $72.5 million last year, and rising raw material costs.
In 2005, Solo had sales of $2.4 billion, a 15 percent increase from 2004, when the company reported just 10 months of results with Sweetheart's combined sales.
Losses narrowed to $8.1 million last year from $49.9 million in 2004.