Packaging major Bemis closing additional plants

NEENAH, WIS. (Updated Aug. 24, 5:25 p.m. ET) — Bemis Co. Inc. will close several more plants as part of its facility consolidation program.

Bemis said it is adding plants in four locations — in the Twin Cities region of Minnesota; LeTrait, France; Monterrey, Mexico, and Curitiba, Brazil — to its list of closures for 2012. That will bring the firm's number of closings this year to nine, according to its second-quarter earnings report.

The Twin Cities closure includes two small plants in Minneapolis and St. Louis Park. For management purposes, Bemis considers it one location, said Vice President and Treasurer Melanie Miller by phone.

The Minnesota plants manufacture flexible, high-barrier food packaging for the company's Curwood Inc. unit. The closure will affect about 150 workers.

In late 2011, the company announced it was closing smaller plants in Oshkosh, Wis., Flemington, N.J., and Longview, Texas. In January, it added facilities in Newark, Calif., and Toronto to the list. Four of those plants had closed by the end of the June and the remainder will end production by the end of the year.

Closing the plants is “a matter of improving efficiencies and better managing costs,” Miller said.

The soon-to-be closed facilities are older buildings in need of repairs such as new roofs or heating systems, or are in locations where the firm cannot expand, President and CEO Henry Theisen said in the firm's second-quarter earnings conference call.

Bemis will move production and relocate equipment from the shuttered plants to other locations, allowing it to maintain capacity, Theisen said. The consolidation will improve Bemis' footprint and allow it to avoid some future capital expenditures, he added.

By closing an additional four plants, the company will save an estimated $50 million in annualized costs, up from a projected $40 million, starting in 2013, according to the earnings report. Bemis also said it will spend about $141 million in consolidation costs, up from an estimated $84 million.

Closing plants outside the U.S. comes with “extraordinarily higher social costs,” offering less “bang for the buck” in the short term, said Scott Ullem, vice president and chief financial officer, in the firm's second-quarter earnings conference call.

“We're doing it because it's the right thing to do for our geographic footprint; it's the right way to continue to capitalize the ongoing facilities we have in place,” Ullem said.

The Neenah-based company acquired five of the plants in 2010 when it bought the Food Americas operations of Alcan Packaging from Rio Tinto plc for $1.2 billion.

Theisen said Bemis has no plans to close additional plants in the foreseeable future.

“We need to get back to growing our business and get away from these unfortunate closings,” he said.