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By Frank Esposito
SENIOR STAFF REPORTER
Published: July 16, 2013 11:10 am ET
PolyOne Corp. plans to close six of the plants it recently acquired as part of its purchase of Spartech Corp.
The plants to be closed are in Warsaw, Ind.; Evanston, Ill.; Portage, Wis.; Cape Girardeau, Mo.; Donora, Pa.; and Lake Charles, La. The closings will eliminate about 250 jobs and produce $25 million in annual savings for Avon Lake, Ohio-based PolyOne, which ranks as North America's largest compounder and one of the region's largest resin distributors. The closings are expected to be completed by the end of 2014.
"These actions are entirely consistent with our previously announced plans to integrate PolyOne and Spartech and to accelerate our specialty transformation," PolyOne Chairman, President and CEO Stephen Newlin said in a July 16 news release. "By combining our resources, we expect to better serve our customers with a more competitive cost structure, improved product quality and on-time delivery with increasingly innovative technologies."
All of the affected plants are in North America, but locations and product mix of the plants to be closed were not included in the release. Some 29 of the 30 plants that PolyOne acquired from Spartech are in North America, with the lone exception being a plant in France.
Production at the closing North American facilities will be shifted to other PolyOne locations. PolyOne will take charges of $35 million related to the closings over the next 12-18 months. That total includes about $20 million in cash charges associated with asset relocation and severance.
"While the business case for these actions was clear, we understand the impact this announcement will have on affected employees, their families and local communities," Newlin said in the release.
According to PolyOne, the Warsaw and Evanston plants make sheet. The Portage plant makes packaging. The Cape Girardeau and Donora plants make color and engineered materials. The Lake Charles plant does contract manufacturing.
PolyOne paid $393 million for Spartech, a major producer of plastic sheet as well as color and additive compounds based in Clayton, Mo. The purchase price represented an almost 60 percent premium over what Spartech's stock was trading for at the time the deal was announced. Spartech had annual sales of more than $1 billion, but had struggled recently, losing more than $70 million combined in its 2010 and 2011 fiscal years.
Officials have said the deal is expected to create $65 million in annual cost synergies by the end of the third year after the acquisition.
PolyOne posted sales of $2.9 billion in 2012. The firm operates more than 80 manufacturing and distribution sites worldwide.
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