Sonoco Initiates Cost-Reduction Actions
August 19, 2003 By Pulp & Paper Canada
HARTSVILLE, SC Sonoco, the global packaging company, initiated its previously announced structural cost-reduction…
HARTSVILLE, SC Sonoco, the global packaging company, initiated its previously announced structural cost-reduction actions expected to achieve approximately $60 million before tax in additional savings, it was announced by Harris E. DeLoach, Jr., president and chief executive officer.
The cost reductions will have two components. One will be the elimination of approximately 340 positions worldwide, including some 130 positions at the Company’s Hartsville, S.C., headquarters, as well as reductions in certain other sales and administrative costs. Virtually all of the positions are salaried. Most of the position reductions will occur by the end of the fourth quarter and are expected to ultimately produce annual savings of about $31 million before tax. Excluding restructuring charges, expected to be approximately $22 million before tax, these reductions are expected to have an insignificant impact on operating earnings in the third quarter and then an accelerating positive impact.
In addition, the Company’s goal is to close approximately 20 plants globally to achieve about $27 million to $29 million before tax in annual savings. The costs associated with the plant closures have not been estimated at this time. Excluding any related restructuring costs, these closings should positively impact operating earnings as they are announced and phased in primarily through the remainder of 2003 and during 2004.
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