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2007-04-24 News Release
Repositioning European
flexible packaging operations
Amcor repositioning program developed to further strengthen and improve
the European flexible packaging, converting and extrusion operations.
The primary objective of the Euorpean Flexibles business repositioning
program, which is part of the Amcor broader “Way Forward”
agenda, is to create a fitter organization with a smaller number of stronger
businesses that are focused on customers and markets, consistent with
Amcor’s strategy.
Find Information and Suppliers of flexible
packaging.
The project will deliver an estimated PBIT benefit of €30 million
per annum for an estimated net cash cost of €60 million. The majority
of the €30 million per annum benefit will be realised from 2009/10.
The overall headcount reduction, excluding divested sites, will be around
900 out of a total workforce of 7600 people. The final outcome will be
determined following an extensive consultation process with a range of
stakeholders.
Amcor’s Managing Director and CEO, Mr Ken MacKenzie said “This
repositioning program delivers a wide range of improvements and better
aligns the business to future market trends and customer needs.
“The anticipated benefits are robust and supported by headcount
reductions and substantial operational improvements. With this improved
operational focus and clearer strategic direction, the business will be
well positioned to deliver solid growth and strong returns.”
Objectives
As outlined at the half year results in February, Amcor Flexibles has
undertaken a detailed strategic and operational review of its packaging
business and a comprehensive repositioning program has been developed.
The primary objectives of this program are to:
• Strengthen market positions through better leverage of technology
and manufacturing capabilities;
• Increase weighting in lower cost regions, particularly in Southern
and Eastern Europe;
• Improve alignment to customer needs and market trends; and
• Create a strong platform for innovation and continued growth.
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AMCOR FlexCan offers many
consumer benefits in a single packaging solution. photo:
Amcor Flexibles |
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Background
The Flexibles market in Western Europe is approximately €9 billion
in sales and includes a wide range of products and technologies, from
simple films to complex multi-layer structures with high-performance properties.
The packaging end markets segments are mainly food, healthcare
and industrial.
The current manufacturing footprint in Europe is 38 plants, in 15 countries
with seven plants in Southern Europe (Spain, Italy and Portugal) and one
plant currently in each of Poland and Russia.
Restructuring Process
A detailed program of communication and consultation has begun with employees
and customers.
Plant closure proposals will be prepared by local management. Once approved,
these proposals will be presented to employees and their representatives
for consultation in accordance with local and European legal requirements.
Over a two year time frame, €40 million will be spent on either new
equipment or the relocation of major pieces of plant to ensure those plants
allocated additional production volumes are appropriately equipped. This
investment will be included in Amcor’s base capital expenditure.
As part of the portfolio review, some plants were identified as having
little strategic importance and will be sold.
Outcomes
From an operational perspective, the plan envisages a substantial reduction
in the number of extrusion plants delivering significant improvements
in packaging manufacturing performance.
In the conversion operations, there will be a significant reduction in
the number of sites with flexographic or gravure printing. Capacity utilisation
will increase considerably and more efficient manufacturing will deliver
a meaningful reduction in waste.
Across the business, there will be a smaller number of larger plants with
an improved technology or market segment focus.
From a strategic perspective the restructuring will increase the percentage
of manufacturing in the lower cost regions of Southern and Eastern Europe.
By the end of this program, one third of the packaging manufacturing sites
will be located in these regions.
An important element in this re-weighting is the announcement of a new
€26 million plant in Poland, dedicated to PepsiCo and supplying flexible
packaging for their fast-growing snack food packging business in Eastern
Europe. This market segment is estimated to be growing at 15% to 25% per
annum.
PepsiCo is the world leader in snack foods requiring focused and efficient
operations delivering high quality food safe products. The manufacturing
process is technically demanding and Amcor is currently an approved strategic
supplier to PepsiCo in both Europe and Australia.
This investment is consistent with the strategy for Flexibles in Eastern
Europe of supporting the market leaders in fast growing segments with
low cost manufacturing facilities.
Summary
Amcor’s Managing Director and CEO, Mr Ken MacKenzie said “The
program announced today is designed to further strengthen the business
and improve our value proposition to customers. There will be a smaller
number of more focused sites with improved operating performance.
“The geographic presence in Eastern and Southern Europe will increase.
These are regions where Amcor already has an excellent footprint and management
experience.
“Amcor has Flexibles operations in Western and Eastern Europe, the
Americas, Asia and Australasia. Repositioning and improving the European
operations is an important component of growing the flexibles business
globally.”
Amcor Flexibles, headquartered in the United Kingdom, offers innovative
packaging solutions which not only provide high levels
of protection and preservation, but also enhance consumer appeal and convenience.
Amcor Flexibles is one of Europe’s largest suppliers and market
leaders in flexible packaging.
Find information about Amcor
Flexibles.
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