25 Nov 2008 10:09
Proposed closure of Stockton manufacturing facility
25 November 2008
British Polythene Industries PLC (BPI) announces today the proposed closure of its manufacturing facilities in Stockton on Tees with the transfer of all business to other BPI sites. The Stockton facility is part of the bpi.industrial division and produces heavy duty sacks and industrial and agricultural films. Over 40% of the volumes from the site are supplied to the construction sector. During the last six months demand from this sector has reduced dramatically and we expect little prospect for improvement as the UK economy enters recession.
The Stockton site made losses in 2006 and 2007 and, despite initiatives to reduce costs and increase efficiencies over the past two years, the impact of the construction and broader economic downturn will result in a more significant loss at this site of £2.5 million in 2008.
Given the losses, the reduced demand in the market place, the requirement to reduce operating costs and the spare capacity available elsewhere within bpi.industrial, we believe that continued manufacturing at Stockton is no longer viable. It is proposed that production currently undertaken at Stockton will be transferred to other sites within the BPI Group, including Ardeer and Greenock, and could create up to 40 jobs during 2009. It is proposed to undertake a gradual scale down of operations to avoid any disruption to customers.
Regrettably, there will be up to 165 probable job losses and redundancy consultations have commenced with employees. Every effort will be made to find alternative employment either within or outside BPI.
The estimated closure costs, including asset write downs and equipment relocation costs, will be £5.0 million of which £3.5 million will be in cash. Approximately £4.0 million of this will be provided as restructuring costs in the results for the year ended 31 December 2008 with the balance in 2009.
As the Group announced last week, the outcome for 2008, before restructuring costs, is likely to be broadly in line with management expectations.
Enquiries:
| Cameron McLatchie, Chairman | British Polythene Industries PLC | 01475 501000 |
| John Langlands, Chief Executive | British Polythene Industries PLC | 01475 501000 |
| Tim Spratt/Nicola Biles | Financial Dynamics | 0207 831 3113 |