AR Packaging to close two carton plants, axing 150 jobs

06-Oct-2017 - Last updated on 06-Oct-2017 at 11:05 GMT

AR Packaging makes breakfast cereal boxes, among other packaging.

AR Packaging has decided to close two carton plants, in Moscow, Russia, and Kauttua, Finland.

The announcement will affect around 150 employees, with some being offered employment at other locations where possible.

Price pressures

AR Packaging operates three plants in Russia. Following the closure in Moscow, it will serve the Russian market from its two plants in St. Petersburg and Timashevsk.

According to Harald Schulz, president/CEO, AR Packaging, since the acquisition of Mead Westvaco in 2015, sales volume development does not justify having three plants in Russia as price pressure increases.

He said capacity and infrastructure costs need to be reduced to "meet the profitability demands for the Russian rotogravure operations."

To be competitive and profitable in the Nordic carton market, the cost base needs to be substantially reduced and asset utilization increased.

The AR Packaging board decided at its meeting on September 28, to reallocate volumes to other plants in the Nordic region and close the Kauttua production. Sales, customer service and product development functions will remain in Kauttua.

Future developments

“AR Packaging has gained significant new business in targeted segments as set in our strategy,” said Schulz.

“After a successful integration of the businesses acquired during the last few years, we now take a holistic view on our footprint. Strong skill centres and further site specialization through focused technology and know-how will increase the group’s ability to lead future developments while aligning presence to optimal locations.”

Schulz added investments are ongoing at several plants across Europe including four printing machine installations during 2016-2018 and the expansion of its plants in Krakow, Poland, and Tabasalu, Estonia.

The company expansion phase includes acquisitions and migration from general packaging to selected segments.

The strategic plan has three pillars: further growth in Europe in selected business segments, global expansion with selected packaging and further improved operational excellence and cost-efficiency.