Huhtamaki to Stop Flexible-Packaging Production in PA

Huhtamaki will discontinue flexible packaging production at its Malvern, Pennsylvania facility due to low volumes and unsatisfactory profitability. Huhtamaki’s Films production in the same location is profitable and will continue.

A restructuring process will start at the Malvern facility and approximately 80 employees will be impacted. The site employs a total of 160 people. Huhtamaki will take an approximately EUR 18 million one-time charge in the fourth quarter 2008 to discontinue the loss-making Malvern Flexibles operation. The charge is mostly non-cash and the action will improve Flexibles and Films Global segment’s ongoing profitability and cash flow.

Due to changes in the retort market in North America the market share of wet pet food has declined and the volume and profitability expectations for Malvern Flexibles have not been reached.

Huhtamaki will continue to serve the North American customers with flexible packaging from other regions. The Group has ten flexible-packaging production units located in Europe, Asia, South America and Oceania. The most recent capacity expansion investments have been made in India and Thailand.

“As part of Huhtamaki’s strategic growth plan and the Films business success in serving the North American market, the site in Malvern will be dedicated to Films,” said CEO Jukka Moisio. “This move will support the growth of our Films business in North America and strengthens our position to enter new markets and applications from a local supply base.”

Source: Huhtamaki