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Amcor to slash European jobs

Australian packaging giant Amcor Ltd will shed almost one-eighth of its European workforce and reduce the number of its manufacturing sites in an aggressive, cost-cutting restructure aimed at saving €30 million ($A48.82 million) per year. Amcor plan is a new €26 million plant in Poland.

Melbourne-based Amcor Ltd said on Tuesday it hoped to cut about 900 jobs from its workforce of 7,600, and make substantial operational improvements in its flexibles business in Europe. The flexibles market in Western Europe includes products ranging from simple films to multi-layer structures with high-performance properties, and is worth about €9 billion ($12.2 billion) in sales. Amcor said it wanted to create a fitter organization with a smaller number of stronger, more focused businesses. The restructure should deliver estimated profit before interest and tax benefits of €30 million ($40.7 million) a year for an estimated net cash cost of €60 million. "The anticipated benefits are robust and supported by headcount reductions and substantial operational improvements," said Amcor managing director Ken MacKenzie. "With this improved operational focus and clearer strategic direction, the business will be well positioned to deliver solid growth and strong returns." Under the restructure, smaller manufacturing plants will be replaced with fewer, larger operations in southern and eastern Europe, to take advantage of cheaper operating costs. Forty million euros will be spent over two years on either new equipment or relocating major pieces of the plant to properly equip the larger manufacturing sites.

Amcor currently has 38 plants in 15 European countries. A key element to the plan is a new €26 million ($35.2 million) plant in Poland, dedicated to PepsiCo, and supplying the soft drinks maker's fast-growing snack food business in eastern Europe. In February this year, Amcor said it would look to eastern Europe for growth, after interim net profit fell almost 42% to $117.7 million, in the face of rising raw material costs, strong competition and a high Australian dollar. At the time Mr MacKenzie said a re-weighting of Amcor's European portfolio would mean western European sales would fall to around 20% by 2009, compared to 32% in 2005, and sales in emerging eastern European markets were expected to rise to 20% compared to 12% in 2005. Over the past year or so, Amcor has shut down 10 plants while pocketing $420 million through the sale of other businesses, including its Australasian PET (polyethylene terephthalate) operations and Asian corrugated plant, in a fix, sell or close strategy. (