ISELIN, N.J.—Ansell Ltd. has closed three production plants, two in Mexico and another in South Korea, as part of its transformation program, originally launched by the company in July 2017.
Closure of the facilities in Juarez, Mexico, and Janggye, South Korea, primarily will help the rubber latex glove maker achieve enhanced returns on capital through more innovative, efficient and effective manufacturing, one of four main objectives of the transformation program, the firm said.
Ansell closed the three facilities in mid-December, a spokesman said. About 881 direct production employees and 43 indirect workers were laid off at the Mexican sites, he said, as were another 170 employees at the facility in South Korea.
The rubber latex glove maker continually evaluates its operational footprint "to ensure we maximize production efficiencies all over the world," the spokesman said. Operational costs in Mexico "have increased to a point where they are not competitive with those in other regions where Ansell also operates," he said.
He noted that the company's latest action is aligned with the company's Sharper Focus strategy, a transformational project aimed at strengthening the key drivers of growth and profitability of the company's core businesses over the long term.
"This strategy redirects resources to higher growth programs to achieve our goals and meet the priorities of our customers and the company," the spokesman said.
Ansell—which is globally headquartered in Sydney with a North American base in Iselin—plans to consolidate most of its manufacturing activities in Mexico and South Korea into its Sri Lanka, Malaysia and Vietnam factories along with some existing outsourcing partners, he said. The exception will be assembly of the firm's Healthcare Safety Solutions products, which will continue to be handled at a plant in Juarez.
After its extensive review, the company said it developed a road map to create centers of excellence in each of its differentiated product and manufacturing process technologies.
It said it benchmarked all plants against long-term requirements for cost, quality and process capability before making the decision to invest in its Vietnam, Sri Lanka and Malaysia facilities. The firm said that additional investments are in the advanced planning stages at those sites.
Once the initial upgrades in the three facilities were made, a company official said, the firm determined that the factories in Mexico and South Korea would not be able to meet the minimum global performance requirements required by the company.
Implementation of the manufacturing aspects of the Transformation Program "will enable Ansell to deliver significant benefits such as larger scale, stronger competencies and added capacity while also achieving cost savings," according to Magnus Nicolin, CEO and managing director of the company.
"Ansell remains committed to being an industry leader in product innovation and manufacturing capability," he said.
"With our streamlined manufacturing footprint at our best performing and most productive sites, we expect to generate more than $20 million of annual cost savings, slightly above the plan announced in July 2017."
In addition to creating a more innovative, efficient and effective manufacturing base, other goals of the Transformation Program are the creation of a simplified, lower cost organizational structure that is more agile and responsive to customer needs; an increased focus on global supply chain excellence; and increased investment against the firm's organic growth strategy.
When it unveiled the program in 2017, the company said it planned to spend about $100 million in a three-year span to cover the project.
Shortly before launching the program, Ansell set the stage for future changes when it reached a deal to sell its Sexual Wellness business—including its rubber latex and non-latex condom operation—to a China-based consortium for about $600 million. The transaction was finalized in September 2017.
Another spokesman said that net proceeds from the sale, after taxes and additional costs, came to about $523 million and removed a source of complexity in Ansell's overall business, providing the company "with the opportunity to sharpen its focus on its core markets and move to enhance its leadership and engagement in workplace safety markets."
After that deal was completed, the company merged its three remaining operations into two: Health Care and Industrial. Ansell's single use and medical business became part of the Health Care operation that includes its single-use examination and surgical glove segments along with its life science products.
Ansell's Industrial business makes and markets multi-use protection goods for hand, foot and body protection used in a wide variety of industries.