High transportation costs have spurred Plastek Industries Inc. to relocate work to Hamlet, N.C.
The injection molder and toolmaker said it will relocate 200 of the 1,000 jobs now in its headquarters city of Erie, Pa., to the small town where it eventually expects to create 250 jobs.
The $19 million move includes the purchase of a former Rexam plc packaging plant that recently closed.
Plastek and North Carolina Gov. Bev Perdue announced the project April 12 in Hamlet.
In the competitive nature of things, as costs come down, transportation costs become a bigger and bigger line item each year on their budgets, Plastek President Dennis Prischak said in a video posted by YourErie.com.
A key chunk of work to move to Hamlet is deodorant-stick containers, which Plastek now must ship more than 600 miles to customers. Most of Plastek's rivals are already based in North Carolina, according to Prischak.
They have had an advantage for transportation, forcing price reductions on us over the years and even making it more difficult for us, Prischak explained.
He could not be reached for further details on the move.
Plastek will offer the 200 affected employees the opportunity to move to retain their positions. Moving that work could lead to new work moving into Erie to replace what will be lost, according to Prischak. Hamlet will be Plastek's first plant in North Carolina.
The Hamlet facility should be fully operational in early 2011, officials said.
The company specializes in consumer, cosmetic and pharmaceutical packaging and closures. Plastek has three plants in Erie and operations in Mansfield, England, and Indaiatuba, Brazil. It employs in total about 2,000.
Rexam formerly made deodorant sticks at Hamlet. It had employed 220 at the plant, where it injection and compression molded closures and custom packaging for food and beverage applications. Rexam ended work there in the first quarter of this year.
Plastek is a family-owned business started in 1956 in Erie. It is a leading manufacturer of deodorant sticks. Early this year it suggested it was considering a move into North Carolina.
Wages at Hamlet will average $32,800 a year plus benefits, according to Perdue's news release. The average wage in Richmond County is $26,600.
Plastek will be eligible to receive 65 percent of the state withholding taxes for the jobs it creates in each of the nine years the company meets annual performance targets. The grant could yield as much as $1.98 million for the company.
Plastics News estimated Plastek's 2009 sales at $315 million, which includes $190 million in injection molding sales in North America.
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