photo by: Chad Lawhorn/Journal-World photo

Berry Global's plant at 2330 Packer Road in Lawrence is shown on Sept. 14, 2021.

Berry Global, the plastics manufacturer that employs hundreds in Lawrence, is closing at least 15 of its manufacturing plants, but hasn’t yet announced which plants are on the chopping block.

Indiana-based Berry disclosed the future plant closings as part of its second-quarter earnings call on Friday. Berry operates two locations in Lawrence and Douglas County that employ about 900 people.

The company operates a manufacturing plant at 2330 Packer Road in the industrial park just north of the Kansas Turnpike’s West Lawrence interchange. It also operates a distribution center near the Lawrence/Lecompton interchange of the turnpike northwest of the Lawrence city limits.

In late 2021, Berry launched a project to invest more than $60 million to upgrade the Lawrence production plant to make a more environmentally friendly type of plastic cup. That upgrade may make it unlikely that the Lawrence plant would be slated for closure anytime soon.

But it can be tough to predict the actions of a company as large as Berry. The company does about $14 billion in annual sales, so a $60 million investment is relative. But it is worth noting that closing 15 plants is also relative. The company has about 265 sites across the world, making the planned reductions about a 5% cut in locations.

However, that is where the situation stands now. It may change. Berry officials have said they are looking for additional locations to cut.

“We have an additional pipeline of facilities we are giving consideration to, some of which we’ll be able to execute on,” CEO Tom Salmon told investors on a conference call Friday, according to a report in Plastics News, a trade journal that covered the earnings call.

Even if Lawrence isn’t included in any cuts, there could be changes to Lawrence operations, especially employee totals. The company said in addition to closing the 15 facilities, it will undertake “other labor cost reductions.”

“We believe ’23 will see challenging overall market demand,” Salmon said, according to the Plastics News report. “In turn, we’re making long-lasting structural cost improvements while advancing our strategic initiatives to exit 2023 a much stronger and more focused company.”

Of course, there is a chance Lawrence could end up with new work as a result of Berry’s new strategy. The company anticipates moving work from the shuttered plants to more efficient plants. Lawrence might fall into that efficient plant category.

But there’s also a chance that Lawrence plants may be competing with plants in Mexico that likely have much lower labor costs. From the Plastics News article: “Part of Berry’s strategy is to look at lower-cost facilities’ ability to produce and deliver products to nearby higher-cost locations. That includes the potential to increase production in locations such as Eastern Europe to supply Western Europe, India to supply elsewhere in Asia and Mexico to produce products for North America.”

In its earnings report, the company highlighted three sectors that is will continue to “target,” — health care, beauty and food-service markets. I’m guessing the plastic cup business that Lawrence is in would be included in the food-service market.

photo by: Chad Lawhorn/Journal-World photo

Examples of several types of products made by Berry Global are shown at economic development announcement on KU’s West Campus on Sept. 14, 2021. Berry announced that it is expanding its Lawrence manufacturing plant with more cup-making equipment and jobs.

When we reported on the expansion in 2021, the company highlighted the work that it does for the fast-food, convenience store and other similar industries. The company felt like it had gained an important competitive advantage with those industries as companies became more environmentally conscious. The new thermoform, polypropylene plastic cups being manufactured at Lawrence have been touted as being easier to recycle and more environmentally sustainable than other plastic cup lines.

It doesn’t seem like that analysis has changed, but rather the company is rethinking where it ought to be making a host of its products.

“It’s an active part of the review we do on a regular basis,” Salmon said in Plastics News about the possibility of plant closings. “We’ve got additional plans we’re considering. It’s all about what puts us in the best position geographically and from a cost perspective to serve our customer bases more effectively.”

I’m checking around with some area folks who might have some insight into Lawrence’s standing in such a plant reorganization, but haven’t heard anything. At the moment, I think the most accurate statement is it is a situation for community leaders to keep an eye on.

What’s also clear is that Berry Global is not a company in financial peril. Some sort of financial crisis is not driving these changes. The company has remained very profitable and actually is spending a lot of money to repurchase shares.

As part of its second-quarter results, Berry reported earnings of $301 million, or $1.42 per share. For the year, the company expects earnings of $7.30 to $7.80 per share, and anticipated having operating cash flow of about $1.5 billion. It is expected to use about $700 million in cash flow to pay dividends and repurchase shares.