Huhtamaki to cut some jobs and assets in Western Europe
Huhtamaki plans to invest in Eastern Europe and Asia, where it sees the greatest potential for profitable growth. In the meantime, the company is cutting some jobs and plans to dispose of some assets in Western Europe.
Its flexibles and film packaging operations are set to expand globally, with spending focused particularly on Asia and on North America the company - based in Espoo, Finland - announced when it revealed its 2007 results.
New capacity at Huhtamaki’s US flexible packaging plant in Malvern, Pennsylvania, is set to come on stream in the first quarter of this year, the company announced.
Growth in rigid food and beverage packaging will be concentrated on foodservice products in Europe and Asia, while growth in North America will focus on retail packaging, Huhtamaki reported.
Huhtamaki intends to reduce its presence in areas that do not meet its profitability targets or fail to create value under its strategic plan.
In a news release, interim chief executive officer, Timo Salonen said: “In 2008, we have to continue to control expenses as well as improve productivity, and effectiveness of passing on any increases in input costs to selling prices.”
Huhtamaki’s 2007 results were hurt by a fourth-quarter decision to write down assets worth €104m ($151.8 million), mostly related to rigid plastics production in Europe. In December, Huhtamäki announced plans to cut 100 jobs from the European rigid containers division. The company plans to dispose of packaging assets in Northern Ireland, Italy and Germany, according to Reuters news report.
Huhtamaki sold a thermoformed polypropylene thin wall food containers plant in Portadown, Northern Ireland. A leasing agreement was signed with the new owner and production has continued with a reduced workforce.
Job numbers at the site have been slashed from about 300 five years ago to 105 today, and 40 more workers have agreed to voluntary layoffs. Huhtamaki, which warned that more jobs are at risk, blamed the cuts on demand for environmentally friendly packaging.
In Asia, Huhtamaki reported the start-up last year of its fifth flexible packaging plant in India. The new premium packaging and labeling facility is in Rudrapur.
The company expects to complete relocation of rigid packaging from Hong Kong to a larger new unit in Guangzhou, China, by June. In addition, a new flexible packaging plant being built in Bangkok, Thailand, should start production in mid-2008.
