EXTON, Pa.—West Pharmaceutical Services Inc. plans to close its contract manufacturing plant in Frankfort, Ind., and consolidate its facility in Clearwater, Fla., with one in nearby St. Petersburg, Fla.
The publicly traded Exton-based company reported sales of $1.59 billion in 2017 for its two business units: contract manufacturing for the pharmaceutical, medical and consumer industries; and proprietary products, such as stoppers, seals, syringe and cartridge components and self-injection systems.
The Frankfort plant, where 54 employees face layoffs this fall, produces a variety of consumer products. The work will be moved to Williamsport, Pa., Eric Haman, global corporate communications director for West, said in an email to Plastics News.
The Clearwater site, which manufactures metal seals, has about 130 employees, Haman said. The majority will transfer to St. Petersburg, which is a compression molding and lamination operation for medical device components, stoppers and closures.
"This is part of a restructuring program that our company announced in February to help streamline our manufacturing plant network and enable us to operate more efficiently and align our focus toward health care-related diagnostic and pharmaceutical products," Haman said.
In February, West officials said manufacturing operations would be streamlined over the next 12 to 24 months to save $17 million to $22 million annually. However, no plant closings or layoffs were specified publicly until Aug. 2, when the company notified the Indiana Department of Workforce Development that the Frankfort plant would close sometime after Oct. 1 and "virtually all" employees would be terminated, including 10 operator assemblers, eight production leads, three mold makers and numerous technicians and managers.
"While this transition won't happen until closer to the end of this year, we made the announcement to our employees earlier in the year, as we wanted to give our team plenty of time to understand and plan for this," Haman said. "We are closely working with all impacted team members through this transition, and will be offering relocation packages to those employees who are interested in relocating and who have the required skills and experiences to fill open roles across the West network, as we expect job opportunities to grow overall at West in 2018, as they did in 2017.
"In addition, West will be offering generous severance and outplacement services to care for and help in the transition for our employees who will no longer have a role within West," he said.
Once part of Tech Group North America, the Frankfort site is a dedicated facility for consumer products, and offers custom molding, contract manufacturing and assembly operations. The legal notice stated the layoffs will happen in four phases starting with 11 employees on Oct. 1, 30 on Oct. 29, one on Nov. 12, and 12 on Nov. 26.
In Florida, most of the Clearwater employees will transfer to the St. Petersburg location, which is about 8 miles away. Others also will be offered relocation packages to fill other job openings within West or severance and outplacement services.
"This is a consolidation of two sites that are located within a few miles of each other, and the majority of our current Clearwater employees will be retained in this consolidation and will be transferred to our St. Petersburg site," Haman said.
Founded in 1923, West currently has 28 manufacturing facilities in the U.S. and abroad. The other U.S. locations include Phoenix, Scottsdale and Tempe, Ariz.; Grand Rapids, Mich.; Kearney, Neb.; Kinston, N.C.; and Jersey Shore, Litiz, Upper Darby and Williamsport, N.J.
Annual savings
West expects its restructuring plan will cost $8 million to $13 million to implement. Then, the yearly savings of at least $17 million will be invested in high-value proprietary products and health care-related contract manufacturing.
News of the Indiana plant closure and Florida consolidation came two weeks after West celebrated the opening of a 220,600-sq.-ft. facility in Waterford, Ireland, to produce proprietary elastomeric laminate sheeting to package insulin for pen injectors. The site also will handle finish work for stoppers and plungers produced at other West facilities and launch a new product line called Westar Select for pharmaceutical and biotech applications.
West also invested recently in Kinston, N.C., a compression molding operation that produces syringe plungers and IV system components; Jurong, Singapore, a compression and injection molding operation for metal seals, stoppers, closures and medical device components; and in Dublin, which offers clean-room molding and assembly for health care products and medical devices and was part of Tech Group Europe Ltd.
West profit was up 13 percent to $56.1 million on overall sales of $447.5 million in the second quarter. Contract manufacturing generated $101.5 million in sales compared to $346 million for proprietary products for the three months ending June 30.
In that period, the contract manufacturing segment grew organically by 16.9 percent despite the loss of a consumer goods customer that took $32.6 million of production in-house in January. The loss was offset by higher demand for diagnostic and drug delivery devices.
The proprietary products segment saw organic sales increase 6.9 percent to $346 million in the second quarter led by double-digit growth in generics, high-single digit growth in pharmaceuticals and low-single digit growth in biologics.
West develops and manufactures pharmaceutical products, such as auto injectors, pen injectors, pulmonary delivery devices, oral dispensing devices and electronic wearable patch injectors; diagnostic products, such as test kits and consumables, self-monitoring systems, and ambulatory devices; and medical devices, such as IV, lab and blood filters, surgical devices and disposables, ambulatory sets and needle assemblies that are insert molded and UV bonded.
West ranks No. 22 among North American injection molders, according to Plastics News' latest ranking, with molding sales of $362.5 million.
The company reaffirmed its 2018 sales guidance range of $1.72 billion to $1.73 billion in a quarterly conference call with investment bankers on July 26.
"A combination of high-value product sales growth and cost efficiencies more than offset unabsorbed overhead at our Waterford facility, as well as start-up costs and low-margin tooling sales associated with increasing customer demand in our contract-manufactured products segment." West President and CEO Eric M. Green said in a statement ahead of the investment call. "With a solid second quarter, we are on track to achieve our full-year 2018 organic sales growth and adjusted earnings targets. Our markets are stable, and West continues to address the needs of our customers by providing the quality, availability and scientific excellence required to support their regulated injectable and diagnostic products."