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Headlines > Drug Delivery

Chesapeake restructures and exits Brussels

By Nick Taylor , 14-May-2008

Another difficult quarter for US-based packaging company Chesapeake has seen it make plans to close its factory in Brussels, Belgium.

Plant closures were expected, with Chesapeake confirming in a recent conference call that that it would be closing "non-core assets or assets which are under-performing".

 

 

 

At that time it would not be drawn on which plants were facing closure but has now clarified that the Brussels pharmaceutical carton factory and its 42 employees are the first to face the axe.

 

 

 

The restructuring is intended to increase the company's competitiveness, with CEO and president Andrew Kohut stating: "We are committed to further strengthening our pharmaceutical packaging business and delivering the highest quality products and services to our customers.

 

 

 

"This proposed closure will improve overall plant utilization while providing our customers with superior service and quality."

 

 

 

The closure will take place over the coming months, with Chesapeake hoping the move will improve the efficiency of its Belgium operations. Some of the products made at the Brussels plant being transferred to the company's carton manufacturing facility in Gent.

 

 

 

A similar restructuring process is likely to be repeated in other locales as the company attempts to use closures and other "process improvement initiatives" to improve its fortunes, which sunk once again upon publication of the first quarter results.

 

 

 

Operating income exclusive of 'special terms' fell by $15.9m to $0.1m. A challenging quarter had been predicted but Kohut admitted it "was worse than expected."

 

 

 

First quarter sales of pharmaceutical packaging fell with the company citing competitive market conditions as the cause.

 

 

 

A rosier picture of the coming year was painted by Chesapeake, with an increase in the volume of pharmaceutical packaging sales predicted during the coming months.

 

 

 

The company also claimed that the key UK and Ireland markets were starting to show signs of improving. This was in response to changes Chesapeake had already implemented in its attempts to improve service levels.

 

 

 

Chesapeake certainly appears to be taking a proactive approach to tackling its current difficulties which have seen the company's share price take a battering over the last 12 months, with the publication of the first quarter results precipitating another fall.

 

 

 

However, given the current tumultuous nature of the pharmaceutical industry and the wider business environment there can be no guarantees of a turnaround.

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