Packaging major Sealed Air Corp. of Saddle Brook, N.J., by mid-2007 will stop manufacturing food packaging at its facility in Mississauga, Ontario, which operates as part of its Cryovac Inc. subsidiary.
The plan, announced July 26, will affect 250 workers. Sealed Air has earmarked $12 million for charges related to equipment relocation and severance payments.
``Customer orders currently produced in Mississauga will gradually be transitioned to other facilities located in the United States,'' Sealed Air President and Chief Executive Officer Bill Hickey said during the firm's July 26 conference call announcing second-quarter results.
``Our current plans are to maintain sales, warehouse operations and certain support services in Mississauga,'' Hickey said.
The closing is part of Sealed Air's long-term global manufacturing strategy, officials said during the call. Hickey was fielding the call from Shanghai, where on July 26 Sealed Air broke ground on a project announced earlier this year.
``We are very excited about the project and the opportunity to meet the increasing need for both food packaging and protective packaging in the rapidly growing market in China,'' Hickey said. ``We expect that the new facility will be operational and ready to ship product in 2007.''
Shifting manufacturing to where it is needed will cost $130 million to $150 million during the remainder of 2006 and into 2007. The firm is realigning, to make the right product in the right place at the right cost.
``This strategy includes investing in new production capacity in developing markets around the world, creating manufacturing centers of excellence to improve operating efficiencies of our existing facilities, and investing in new technologies to drive additional increases in productivity,'' Hickey said.
In a follow-up interview July 27, Sealed Air spokesman Eric Burrell said much of the capacity from Mississauga will move to a plant in Rochester, N.Y.
The strategy is not surprising, according to one analyst. The beef market has changed globally and the United States is not in the export position it once was compared to other nations.
Sealed Air's sales increased 6 percent to $1.08 billion for 2006's second quarter, with profit increasing to $307 million from $296 million for the same period in 2005.