Time to streamline

Last weekSanford Brands announced plans to permanently close a plant and distribution centre "to achieve greater efficiencies", resulting in the loss of 240 jobs. But the company says this is in no way a cost-cutting venture post Dymo-buy

Last week Newell Rubbermaid announced that its US OP division, Sanford North America, is to permanently close a plant and distribution centre in Madison, Wisconsin, resulting in the loss of 240 jobs over the next three months.

The company said the move, which will centralise its injection moulding and distribution capacities to its Maryville facilities by the end of April, is consistent with its previously-announced Project Acceleration plan – a three-year global initiative to invest in strategic brands – achieve a best cost position and strengthen its portfolio.

In a statement, Daren Couture, VP of operations for Sanford North America, said the announcement was "part of a companywide effort to serve customers nationwide more effectively and continue to make our products available for consumers." This decision, he said, was driven solely by Sanford’s ongoing effort to "achieve greater efficiencies in every facet of our operations", improve existing underutilised operations and eliminate redundant processes.

Sanford’s Madison operation has only 65,000 sq ft of manufacturing space, while the company’s Maryville facilities have approximately 175,000 sq ft. The Maryville plant produces personal organising products and desktop accessories under Sanford’s Eldon brand. 

On Tuesday, the company announced it would expand its Maryville manufacturing operations by 200 jobs.

The news comes at a time when the OP industry is scrutinising Newell’s OP division closely. In November, Newell completed its acquisition of label-writing brand Dymo for approximately $730 million, a deal that group president of Sanford Brands Steve Marton described at the time as "worth every cent" and a "win-win" for both Dymo and Sanford.

But despite Sanford’s grand plans with Dymo, which it claims will bring the brand to better heights than its time under Esselte, many observers still claim that Newell could not afford Dymo. The company had only returned to profit in 2004 and this was assisted by widespread cost cuts. The announcement to close the plant could initially have been seen as evidence that the company is carrying out yet further cost cuts in the hope of balancing the books post Dymo buy.

Sanford has always denied that it is highly leveraged by the purchase and claimed it paid for Dymo with its own cash-flow. Marton affirmed to OPI+ that the acquisition would not impact how Sanford runs its business because the funds were there to invest fully behind the brand. He did not however rule out the possibility of staff cuts.

Further details of specific Sanford Brands locations, divisions or geographies affected by the Project Acceleration plan are expected to be announced in due course. Once again, staff cuts have not been ruled out.