Californian-based EarthShell has confirmed that it has laid off 65 per cent of its staff and cut expenses by $2 million (€2m) a month as it meets its goal of bringing its products to the market.
EarthShell began cutting from its 144-member staff last month at its three US manufacturing plants.
The company said that it had to lay off about 95 people because it was transferring its manufacturing operations to one of its licensing partners, Sweetheart Cup, which will begin to make "clamshell" containers for McDonald's restaurants in North America.
Most of the job cuts were at EarthShell's manufacturing facility in Owings Mills, Maryland, where roughly 85 people were let go, said Vincent Truant, spokesman for EarthShell.
Another 10 people, described by Truant as 'support staff', were laid off between the company's two office locations.
"Well over half" of those who lost their jobs "will be able to serve a valuable function with Sweetheart," Truant added.
"This was all part of our business model, to demonstrate the manufacturing and then, when the opportunity presented itself, to hand it off to our partners," Truant said. "Our business model was never to run manufacturing lines."
EarthShell develops food packaging made primarily from limestone and potato starch. Its products include clamshell containers, cups, plates, bowls and sandwich wraps. When the product is crushed or broken, it begins to biodegrade once it is exposed to moisture or when composted.
The company has manufacturing partnerships with Sweetheart and Green Earth Packaging in the United States, Huhtamaki Oyj in Germany and Green Packaging in Malaysia.
EarthShell has spent 10 years and more than $266 million to develop the technology and perfect the manufacturing process of its products. The company has no debt, but it has yet to show any profit for its 10 years in existence.
Its losses aside, EarthShell has begun to win over big-name customers such as McDonald's, Wal-Mart and federal agencies.
McDonald's signed an agreement in March 2001 to buy Big Mac sandwich containers made from EarthShell materials. Retail giant Wal-Mart started selling EarthShell plates last month in 90 of its stores.
EarthShell had been producing clamshells for McDonald's in limited test quantities up until recently at its Owings Mills facility. That production now has been put on hold so that Sweetheart can expand the manufacturing plant to produce the volume necessary to meet McDonald's needs.