Cenveo to cut 200 of 400 jobs at its Upper Tyrone, Pennsylvania, envelope plant, may move operations due to negotiating difficulties with landlord; company acquired plant last year when it purchased National Envelope
February 25, 2014
– The operator of an envelope plant in Fayette County will start layoffs to reduce employment by nearly half and could move to a smaller space.
Cenveo Inc. of Stamford, Conn., the world's largest envelope maker, continues to be pressured by the rise of email and online bill paying, which reduces demand for envelopes.
Mark S. Hiltwein, president of Cenveo's envelope group, said on Monday that the company knew there was too much capacity in the industry when it purchased the assets of National Envelope out of bankruptcy in September for $25 million.
The purchase included the plant and 400 workers in Upper Tyrone, the largest of eight plants Cenveo acquired.
"We are going to reduce capacity by 50 percent in that location," Hiltwein said. "At the end of the day, there will be more than 200 employees left. ... We'll start moving equipment out of there as soon as possible."
He said Cenveo would like to stay in the area because it has a good workforce, "but we are having a hard time negotiating with the landlord," and that might force a move. Cenveo hopes to sublease about half the plant to others.
The plant is about 400,000 square feet in size, or nearly eight football fields.
If Cenveo moves, one possibility is the former Sony Corp. television plant, near the New Stanton interchange of the turnpike in Westmoreland County, Hiltwein said. Don Smith, president of Regional Industrial Development Corp., which owns the former Sony plant, said talks with Cenveo are preliminary.
The owners of Cenveo's plant in Upper Tyrone is Spirit Realty Capital Inc. of Scottdale, Ariz., according to county property records. A spokesman could not be reached. Cenveo's lease expires in 2020, Hiltwein said.
National Envelope's parent, NE Opco Inc. of Frisco, Texas, sought Chapter 11 bankruptcy protection in June for the second time in three years. It had not reported a profit since 2007, blaming sales declines on electronic competition and "a continuing decline in the volume of U.S. mail."
Hiltwein said after its purchase of National Envelope, Cenveo knew there were regions with excess capacity.
"There would have to be some reductions because there were too many factories, by 20," he said. "We're a U.S.-based company, and we're committed to keeping a healthy company in the U.S.
"That requires us to do something I don't like in shrinking the facility. We want to keep as many people employed as possible."
A spokesman for United Steelworkers Local 198, which represents workers at the plant, could not be reached.