Posts tagged with Plant Closures
It's time to start keeping an eye on one of Douglas County's larger employers.
A leading trade publication is reporting that Berry Plastics has made a decision to close five plants and make a $100 million investment in another one. Thus far, Berry's operations in Douglas County aren't on either the expansion or closure lists, but two more plant closings are still to be announced.
The trade publication Plastics News is reporting that Evansville, Ind.-based Berry Plastics is set to close five production plants in an effort to cut about $27 million in annual operating costs. At the same time, Berry is in the process of making a $100 million investment to expand its production capacity of a growing polypropylene cup line.
Berry operates two facilities in Douglas County: a manufacturing plant that years ago was part of the Lawrence-based Packerware Corp. and a large new warehouse and printing operation just west of the Lecompton interchange on the Kansas Turnpike.
Thus far, Berry has only announced three of the five plants it intends to close. They are in Houston, Kent, Wash., and Alsip, Ill. The other two plants will be announced in the coming months, according to the article in Plastics News.
I talked with a spokeswoman at Berry's corporate headquarters, and she gave the fairly standard line that she couldn't comment on whether the Lawrence plant is under consideration for closing. An economic development professional at the Lawrence Chamber of Commerce, however, told me this morning that he also had talked with a Berry official and was assured that Lawrence wasn't one of the plants being considered for closure.
So make of that what you will at the moment. One factor that seems to be in Lawrence's favor is that Berry, within the last couple of years, invested more than $20 million to build a major distribution center near the Lecompton interchange of the Kansas Turnpike. For Berry to close its production plant after making such a major investment in a distribution center would seem to be an odd course of action.
What is clear is that Lawrence didn't win an internal competition within Berry to land a major $100 million project. The Plastics News article reports that Berry is converting a once shuttered plant in Madisonville, Ky., to receive $100 million in upgrades to make its Versalite line of beverage cups. The expansion, which began in late 2012, is expected to create about 400 jobs.
The Versalite line of cups seems to be the hottest part of Berry's business right now. It is a new process for making recyclable plastic to-go cups. The Subway sandwich chain already uses the cups. I'm not sure whether the development of the Versalite product is good news or bad news for Berry's operations in Lawrence.
Back in 2009 we were reporting one of the major reasons Berry needed a new distribution center is because of high demand for a new drink cup line that was being produced in Lawrence. It was lighter weight and more environmentally friendly. But company spokeswoman Eva Schmitz confirmed that Lawrence does not produce the Versalite line of cups.
That's significant because it appears that Versalite is the product the company is betting on for the future. When Douglas County officials approved a tax abatement and other incentives for the project 2011, the hope was that the new distribution center would create more jobs in the future by opening up space in Berry's production plant. The distribution center itself only created about a dozen new jobs, although it transferred about 200 jobs out of the Lawrence production plant to the distribution center.
Schmitz said she did not know whether the Lawrence production plant was ever in the running to land the $100 million Versalite project and its 400 jobs. She said the Kentucky facility was chosen because it was closer to Berry's research and development labs in Evansville.
At the moment there appear to be two questions Lawrence leaders will want answered: 1. Is the Lawrence plant being considered for closure? 2. If not, have Lawrence's hopes for a major expansion by Berry been dashed?
Perhaps Berry already has expanded all it can at the Lawrence plant. It has been difficult over the years to keep track of how many employees Berry has in Lawrence. In 2007, a company representative said it had about 500 employees in Lawrence. By 2009, when the company was adding equipment for a drink cup line, it had about 950.
The Lawrence Chamber of Commerce's latest job survey, which was taken last year, showed about 740 employees. Schmitz is working to confirm the company's current Lawrence workforce totals. (UPDATE: Schmitz at Berry confirmed the company has about 650 employees currently. The 950 number of years ago included a large number of temporary workers, she said.)
I'll let you know when I hear more. But this one will be an interesting one to watch. A closure of the plant, of course, would be a major blow to the local economy. I think local officials feel a closure is unlikely. The larger question may be whether Berry will be expanding in Lawrence like officials had once hoped when county commissioners approved a significant amount of incentives for the company.
We'll see. At the moment, it is kind of feeling like the 2012 National Championship game: Kentucky over Kansas.