Bemis Announces Cost Reduction Plans
- Published: July 19, 2017
NEENAH, WI | Bemis Company reports a restructuring and cost savings program to improve efficiency and profitability.
“Improving the performance of our US Packaging business is a key priority in creating value for our shareholders," says William F. Austen, Bemis Company's president and CEO. "During April, we began a review to align our US manufacturing and administrative cost structures with the demands of our customer base to better position the company in the current environment and for its long-term success. Given the challenges in the Brazilian economic environment, we also expanded the scope of our review to include our entire global business. We are targeting a total company cost savings plan of $55 to $60 million as we create a more agile, streamlined, and efficient business that is well-positioned for the long-term.”
Actions include the following:
- Optimizing manufacturing capacity. The company has definitive plans to close two manufacturing facilities; work performed at these facilities will be transferred to other Bemis locations. The closing of one of these facilities will take place in 2017 and the other in 2018. Benefits from these two plant closures will be approximately $10 million when fully implemented. The company says it continues to evaluate opportunities to consolidate additional facilities.
- Reducing SG&A Cost Structure. Bemis will reduce its administrative support cost structure to align with the current business environment. These activities will result in a reduction of approximately 300 positions, or 5% of the global administrative workforce, over the next three years. Impacted employees will receive job placement assistance and severance benefits to assist in their transition. The cost savings from these changes will be approximately $20 million over the next three years.
Austen says, “We are focused on improving our business and further positioning ourselves for long-term profitable success. As we begin to implement the first steps of this cost savings plan in 2017, we will also continue our comprehensive review to finalize the remaining cost savings, to outline future capital spending, to explore ways to offset headwinds of the current economic environment in Brazil, and to reshape our go-to-market efforts to align with the evolving US packaged food landscape.”
Austen continues, “The strong foundational elements of the company remain unchanged. We are committed to our dividend program and returning free cash flow to our shareholders, to developing opportunities for organic and inorganic growth, and to providing an attractive, long-term investment for our shareholders.”
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