Pactiv Corp. will close its City of Industry, Calif., packaging plant by the end of March, affecting 250 employees.
The 200,000-square-foot facility principally produces polystyrene containers used in fruit and vegetable packaging, the Lake Forest, Ill.-based company said in a Nov. 1 news release.
The decision to close the plant was driven by a shift in market demand from PS to PET containers, the company said.
“We need to produce what our customers want and with the material of preference,” Kevin Quinn, Pactiv's vice president of operations, said in the release.
Pactiv separately operates a specialty packaging plant in City of Industry that will be unaffected by the PS facility shutdown.
Also on Nov. 1, the company reported third-quarter 2010 profit of $79 million on sales of $944 million, compared with profit of $79 million on sales of $839 million for the year-ago period.
According to Pactiv, its recent $200 million acquisition of thermoformer PWP Industries Inc. of Vernon, Calif., added $42 million to third-quarter sales.
“We had good volume performance in the quarter in markets that continue to be weak, with organic volume growth of 6 percent and the PWP acquisition adding 5 percent,” Chairman and CEO Richard Wambold said in the release. “However, margins were compressed as raw material costs increased in the quarter, and we incurred approximately $11 million of higher operating costs related to the startup of new production processes and equipment.
“In addition,” Wambold said, “there was approximately $9 million in expense related to the proposed sale of Pactiv.”
Pactiv is being acquired by Reynolds Group Holdings Ltd. of Auckland, New Zealand, a subsidiary of billionaire Graeme Hart's Rank Group Ltd. The deal, expected to close at the end of the year, is valued at about $6 billion.
Pactiv, the maker of Hefty trash bags, is in the final phase of a two-year, $12 million equipment upgrade to increase capacity for its line of expanded PS food-processor trays.
The program to update extrusion, thermoforming, padding and packaging equipment at four U.S. plants is expected to be complete in early 2011.