Rexam to further reduce 12oz can making capacity in US

Rexam, the global consumer packaging company, announces that it is to make further reductions in its 12oz beverage can making operations in the US to address overcapacity in the North American market. The timing of this announcement coincides with internal announcements to affected employees in the US.

In July this year, Rexam announced the closure of its plant in Forest Park, Georgia, and a line at its Longview, Texas, plant; an annual capacity reduction of 1.9 billion cans. As announced at that time, the company has continued to review its US capacity with regard to 12oz beverage cans for carbonated soft drinks and has now decided to shut its plant in Oklahoma City, which makes about 1.2bn 12oz cans a year. It will also reduce end manufacturing capacity and there will be a number of associated staff reductions across the North American beverage can organisation.

There will be no impact on the company’s ability to meet current customer requirements, as supply will continue from other plants within the US.

The Oklahoma City plant has 80 employees. They will be provided with a severance package as well as outplacement assistance.

The capacity reductions in cans and ends will result in an exceptional restructuring charge in 2008 of around US$67m in total, of which some US$27m will be cash costs (net of asset disposal proceeds). In aggregate, the plant and line closures are expected to generate annualised savings of more than US$20m.

Commenting, Leslie Van de Walle, Rexam’s CEO said: “We continue to proactively manage our beverage can operations in the US. It is the world’s largest beverage can market and we remain ever conscious of the need to maintain our capability to deliver world class quality products and services to our customers. These plant and line closures improve our efficiency, increase our utilisation rates and reduce our cost base in challenging market conditions.”