Anticipating reduced demand for PET bottles from PepsiCo Inc., its largest customer, Constar International Inc. will lay off workers at four plants.
Constar confirmed that facilities in Dallas; Jackson, Miss.; Hebron, Ohio; and Cheraw, S.C., will be affected, said a spokesman for the Philadelphia-based firm in an Aug. 19 telephone interview. He did not reveal the number of layoffs, which will be in two cycles, one commencing Oct. 15 and a second round at the end of the year.
Constar will close its 198,000-square-foot plant on St. Germain Street in Dallas and will consolidate operations into its 636,000-square-foot plant and warehouse on Cockrell Hill Road, according to an Aug. 15 filing with the Texas Workforce Commission.
Constar employs 2,150 at 14 plants in the United States and two European facilities. According to data from local officials, there are about 135 Constar employees at the St. Germain Street plant in Dallas, 175 in Hebron, 95 in Jackson and 75 in Cheraw. Employee data for the second Dallas-area facility were unavailable.
Constar is negotiating a new contract with Pepsi to replace a deal that expires Dec. 31. The new agreement will be for ``significantly lower volume,'' and will result in Constar shifting production to fewer bottles and more performs, said Michael Hoffman, Constar president and chief executive officer, in an Aug. 14 conference call.
``This will help us relieve a strategic weakness we've had, with too much reliance on a single customer,'' he said. According to Securities and Exchange Commission filings, Pepsi makes up 36 percent of Constar's overall business.
In recent years, Constar has struggled with increases in resin, power and transportation costs, as well as a decline in bottled soft drink sales. The company reported a 2007 loss of $26.3 million on sales of $881.6 million. In 2006, Constar showed a loss of $10.3 million on sales of $927 million.
For the first six months of 2008, Constar reported a loss of $12.5 million on sales of $457.6 million, compared to a loss of $11 million on sales of $452.9 million for the same period in 2007.