Amcor Plans To Put More Jobs On Shelf

Sydney Morning Herald

Monday January 5, 2009

Matt O'Sullivan

AMCOR is planning another round of cost cuts as part of its latest restructure in Australia, with up to 60 senior and middle managers expected to lose their jobs and another 100 also to go if the board opts to close a flexibles packaging plant in Sydney.

The packaging giant's carton manufacturing plant at Botany has also suffered a major blow. Three independent sources close to the company say the plant has lost a large contract, on which it relied heavily, with the breakfast food manufacturer Kellogg's, to a privately owned group in New Zealand, Carter Holt Harvey.

A proposal to close Amcor's medium-sized flexibles plant in the western Sydney suburb of Regents Park is expected to go before the board shortly.

The closure - which could take six months to complete - would remove Amcor from the flexibles manufacturing market in NSW.

Industry insiders say the threat of closure has long overshadowed the plant, which employs about 100 workers.

The flexibles business, which makes packaging for foods such as potato chips, has traditionally been highly profitable for Amcor. But over the past year it has been hit by Asian imports and higher costs for raw materials.

Blue-chip clients are said to be pressuring Amcor to lower prices by threatening to buy imports. "They're getting absolutely hammered on price," an industry insider said.

It is understood that Amcor Australasia's chief operating officer, Don Matthews, wants to dismiss up to 60 managers over the next two months.

Amcor has already combined the offices for Amcor Australasia and the group's global headquarters - which had operated from separate locations - in the Melbourne suburb of Hawthorn.

Amcor Australasia began thinning its management ranks late in 2007, when it made redundant at least six senior executives.

The upheaval continued in the months that followed and reached a climax in March when the head of the Australasian operation, Greg Beatty, resigned after four months in the job.

The departure of Mr Beatty, a former head of Fonterra Australasia, on March 7 for "personal reasons" came one week before industry insiders say he was due to announce turnaround plans to his internal team at Amcor.

Amcor's share of the corrugated box market in Australia has fallen from more than 50 per cent about three years ago to less than 40 per cent, in the face of aggressive competition from Richard Pratt's Visy and the smaller player, Carter Holt Harvey.

In October Amcor said earnings from its Australasian fibre-packaging business were expected to fall in the first half of this year because of a lag in passing on higher input costs.

Shares in Amcor have fallen 21 per cent over the past eight months and closed down 10c to $5.70 on Friday.

Amcor declined to comment on the latest restructuring.

© 2009 Sydney Morning Herald

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