Customers affected by the closure will be directed towards other Glass - North America facilities.
Cost reduction
Ardagh said ‘this footprint adjustment’, combined with its ‘ongoing focus on cost reduction, will enhance its competitiveness, and optimize the effectiveness of its capital investments’.
The company previously noted in its Q4 2017 earnings report glass packaging revenue North America declined by 14% to €337m in Q4 compared to the same period the previous year.
It said: “On a constant currency basis revenue was 8% lower, due mainly to lower volumes, in particular in the beer and wine end markets.
“Adjusted EBITDA decreased by 28% to €61m in Q4, compared with the same period in 2016.”
A review of its Glass North America division at that time led to closure of its Milford, Massachusetts facility; pursuing growth opportunities in stronger performing end markets such as food, wine and spirits; reduction in the mass beer category and revision of its freight and logistics structure.
In addition the company said in its Q2 2018 earnings report in October last year: “We have continued to focus on a broad range of internal initiatives to improve our competitive position. These involve adapting our footprint to best match current and projected market conditions, whilst seeking to target benefits from increased automation, continuous training and greater labour flexibility.
“Much activity has been under way in the quarter and we have now decided: the furnace at our Ruston, Louisiana, plant, which we suspended in July 2018, will now be permanently closed. Ruston will continue to serve a predominantly local and regional customer base, with a more cost-effective freight configuration.
“Secondly, our investment to re-deploy beer capacity to serve better-performing end markets such as wine and spirits, enables us to avoid the scheduled rebuilding of one furnace at our Seattle, Washington, plant. This furnace will now be permanently closed around the end of this year.”
Long-term prospects
It said in a statement: “These footprint adjustments are intended to underpin the medium and long-term prospects of our North American Glass business.
“We have previously highlighted how the North American glass industry, including Ardagh, needs to address its labour costs if it is to sustain long-term competitiveness and justify continued investment. This reflects the striking differential in all-in labour costs between North America and other markets, including Europe. We want to work with our colleagues in the coming quarters to secure a competitive and sustainable footprint, from which we can move forward.
“In the past decade in our European Glass business we have seen the benefits of capacity rightsizing and enhanced flexibility, backed by investment in our asset base. Improved competitiveness has supported a stable footprint and high-quality, skilled jobs, despite considerable economic volatility in the region over the past decade.
“We are now seeking to do the same in Glass North America and, whilst it has had a challenging year, we will continue to identify and implement additional measures to restore it to appropriate levels of profitability.”
