Essentra Packaging to consider plant closure after $4.4m operating loss
The news comes after the company reported a £3.4m ($4.4m) operating loss in the first six months of this year, and this was not expected to improve 'in the near or long term' future.
IP5 carton plant
It wants to close its Essentra IP5 carton plant, in Imperial Park, Coedkernew, which makes folding cartons but its other Newport factory, IP4, which creates foils and labels and contains a design hub with 110 people, is not affected.
A consultation with affected staff has been launched and, if the plans go ahead, the site will close at the end of this year.
Paul Forman, CEO, Essentra, said it was ‘with regret’ it was entering into a consultation process.
“Specialist secondary packaging is strategically important for Essentra, given the size of the underlying market and our extensive product portfolio and expertise,” he said.
“However, if we are to rebuild solid foundations from which we can restore growth in our global health and personal care packaging business, it is imperative we focus our capabilities on those activities which provide the most attractive, profitable opportunities in which we can add value to our customers.
“It is clearly with regret that we are entering into consultation on this proposal, and I and the project management team are committed to undertaking this process in an open, honest and respectful way.
“The possible closure of the IP5 site in Newport is in no way a reflection on the quality or commitment of our employees.
“Rather, the proposed closure of the facility will help to underpin the company’s strategic objective of becoming the leading supplier of innovative packaging solutions and services, from a cost effective and operationally efficient site footprint.”
Closure end of the year
The announcement is a blow to the region after it received a £400,000 grant by the Welsh Government in 2015 to expand operations, creating a further 170 jobs in Newport.
A Welsh Government spokesman said: "This will be a worrying time for workers and their families and we will be working closely with the company and others to ensure employees are fully supported throughout this difficult period."
A consultation has begun on plans to stop production at the factory and, if agreed, work would cease by the end of the year.
South Wales East Conservative Assembly Member, Mohammad Asghar, said: "This is disappointing news and will understandably be causing great anxiety and concern amongst the affected employees and their families.
“It is always extremely difficult for those affected by the prospect of redundancy, and this is sadly another blow for the area after similar job losses, with plans to cease trading at the site by the end of the year.
“The Essentra cartons plant has received substantial investment from the Welsh Labour Government to help expand its operations in the city – this has clearly not succeeded – and down the line there will be some serious questions for Ministers to answer.
“In the meantime, the Welsh Government must step in immediately and consider what packages of support they will be able to offer the workers who have been made redundant, both in terms of retraining and support in securing new employment.”
Essentra has 29 packaging manufacturing sites globally and facilities in 10 countries, with development and design centers supporting the division worldwide.
It opened a 52,000 sq ft facility in Imperial Park in 2014, into which it consolidated a number of smaller packaging manufacturing operations including digital printing, a cleanroom for production of labels and packaging foils for the healthcare and consumer goods end-markets and in 2015 it secured an adjacent 225,000 sq ft facility to support its expansion plans.