Packaging firm Bemis Co. Inc. of Neenah, Wis., will double the size of a flexible packaging plant in New London, Wis., as part of a global tactic under which it is exiting low-margin businesses and focusing on higher-growth segments.
The plan includes building a new plant in Northern Ireland and expanding a site in Selangor, Malaysia, officials said during the company's Oct. 25 conference call. All three plants operate under Bemis' Perfecseal division, which focuses on medical device and pharmaceutical packaging. Perfecseal is based in Oshkosh, Wis.
In New London, Bemis will add 87,000 square feet, sales and marketing specialist Terri Groth said in an Oct. 25 telephone interview. The space will allow for a foil laminator for high-barrier packaging in a clean-room atmosphere. It also gives Bemis room to add multilayer extrusion lines, Groth said.
The project will be completed by early 2007.
In Derry, Northern Ireland, where Bemis has had a plant for 10 years, a new facility is under construction. Bemis said it will consolidate the older operation into the new one.
``The construction of and relocation to our new medical device plant in Northern Ireland is well under way,'' Bemis President and Chief Executive Officer Jeff Curler said during the conference call. ``This modern plant will create much-needed capacity for medical device packaging and accommodate expansion into pharmaceutical packaging in the future.''
In Malaysia, Perfecseal will add printing and laminating capabilities.
Bemis has focused on improving its profitability this year, closing older, less efficient plants.
``This has reduced fixed costs, improved efficiency on many of our existing, modern production lines and allowed us to consolidate production into larger facilities to more efficiently allocate our valuable engineering and production resources,'' Curler said.
At the beginning of the year, Bemis closed a flexible packaging operation in Denmark, Wis., moving production to a plant in Lancaster, Wis. Bemis has closed plants that were making monolayer polyethylene film, as it walks away from low-margin businesses, Curler said in response to questions from analysts.
``Where we are spending the [capital expenditures] is where we're seeing growth,'' he said. Those segments include polyester technologies, multipacks, multilayer barrier films, and medical device packaging.
As for the low-margin businesses, Curler said, ``We're pretty much done with our move away from those businesses.''
Gene Wulf, Bemis' chief financial officer, said that the firm's 2006 capital expenditures would be between $175 million and $185 million.
``This level of spending is higher than Bemis' historical annual investment and is about 15 percent above our announced long-term capital investment target,'' Wulf said. ``Our current investment level reflects our need to expand capacity in our high-growth markets.''