CCL Industries to permanently close aerosol manufacturing operation in Penetanguishene, Ontario, commencing H1 2014 and completing no later than mid-2015, due to distance from key customers, rise of Canadian dollar
November 22, 2013
– CCL Industries Inc. ("CCL") (TSX:CCL.A)(TSX:CCL.B), a world leader in specialty label and packaging solutions for global corporations, small businesses and consumers, announced today that it plans to permanently close its Canadian aerosol manufacturing operation commencing in the first half of 2014 and completing no later than mid-2015.
Geoffrey T. Martin, President & CEO of CCL Industries said, "It is with great regret that we are announcing this news. Our operation in Ontario now exports its entire output into the United States; distance from key customers and the step change rise of the Canadian dollar over the last decade combined to significantly impede competitiveness. The plant has been unprofitable since 2009 and posted sizable losses during the economic crisis years. Although results improved in 2012 and 2013, the operation continues to make losses; consequently we feel it is now time to make this difficult decision."
Mr. Martin commented, "In addition to appropriate severance and other benefits, we will do our very best to help the 170 employees at the site develop their personal transition plans. Many of them have long tenure with CCL so early notice of the closure gives reasonable time to consider options. These will include outplacement assistance embracing, where possible, international transfers within CCL Container and domestic opportunities at our CCL Label and Avery business units as we simultaneously expand their manufacturing operations in both Toronto and Montreal."
Mr. Martin continued, "CCL Container will consolidate the sales volume from the Canadian plant into its existing operations in the United States and Mexico, investing approximately $25 million in required capacity and infrastructure additions at its Hermitage, Pennsylvania and Guanajuato sites over 2014 and 2015. This includes the previously announced new aerosol production line planned for installation in mid-2014. The Company will record a pre-tax one-time restructuring charge of $11 million during the fourth quarter of 2013 to provide for the closure costs with approximately 40% in non-cash asset write downs and the balance largely in employee severance. In addition, we expect to expense approximately $4 million from mid-2014 through the first half of 2015 in other one-time transition costs. CCL Container is targeting an increase of $10 million to its current annualized EBITDA run rate of approximately $30 million when the consolidation is completed in mid-2015."
Mr. Martin concluded, "We firmly believe this decision was essential to optimize the CCL Container supply chain footprint and cost position to best service our important Home & Personal Care customers, all of which are now located in the United States and Mexico."
CCL Industries employs approximately 9,700 people and operates 88 production facilities in 25 countries on five continents with corporate offices in Toronto, Canada, and Framingham, Massachusetts. CCL Label is the world's largest converter of pressure sensitive and extruded film materials for a wide range of decorative, instructional and functional applications for large global customers in the consumer packaging, healthcare, automotive and consumer durables markets. Extruded plastic tubes, folded instructional leaflets, precision printed & die cut metal components with LED displays and other complementary products and services are sold in parallel to specific end use markets. Avery is the world's largest supplier of labels, specialty converted media and software solutions to enable short run digital printing in businesses and homes alongside complementary office products sold through distributors and mass market retailers. CCL Container is a leading producer of impact extruded aluminum aerosol cans and bottles for consumer packaged goods customers in the United States, Canada and Mexico.