ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Thursday, March 27, 1997 TAG: 9703270048
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: MAG POFF THE ROANOKE TIMES
Shorewood Packaging's sheeting facility, where 10 to 12 people work, will not be affected.
Shorewood Packaging Corp. confirmed Wednesday it is shutting its Roanoke transport facility, saying the company is losing money on hauling.
The New York-based carton maker will use outside haulers in the future to move its products, said Marc Shore, Shorewood's chairman and president.
"The transportation and freight delivery industry has become extremely competitive and does not fit within Shorewood's core business," Shore said.
The move was expected. The company said earlier this month that it was considering selling, shrinking or enlarging the transport unit. Shorewood notified affected employees Tuesday of its decision under the federal law that requires giving 60 days' notice of a closing.
The packaging company makes high-quality paperboard cartons for tobacco, cosmetics, food, home video, music, software and other products in 10 locations nationwide. The trucking unit, in Roanoke, served all of those operations and did contract hauling for outside businesses.
Howard M. Liebman, Shorewood's executive vice president and chief financial officer, said the unit, Shorewood Transport Inc., has 90 to 100 employees.
He said the business will be phased out between now and the end of April, but the employees will receive their full salaries and benefits until May 26. Pay rates were not disclosed.
The closing does not affect Shorewood Packaging Co.'s sheeting facility, which also is located on Mary Linda Avenue in Roanoke's Statesman Industrial Park. Liebman said 10 to 12 people make paperboard sheeting for the company's cartons at that facility.
The Shorewood employees affected by the closing include more than 70 drivers, who may have trouble finding comparable work in the Roanoke area.
W.P. Johnson of W.P. Johnson Equipment and Materials Inc. of Moneta said business is not good in the trucking industry. "Everybody wants to work below cost," primarily by not meeting legal requirements, he said.
Shore said that "transport of late has been losing money, and the purpose for its existence years ago can be fulfilled today by outside freight companies without compromising the service to our customers."
Hauling for noncompany customers brought Shorewood $4.9million in revenue during the first nine months of the fiscal year ended Feb.1, Shore said. He said that resulted in an operating loss of $599,000.
"Our analysis indicates that outsourcing this function will not only eliminate the recent operating losses," Shore said, "but will significantly reduce the company's future freight and delivery expenses."
Shorewood Packaging estimated that closing the Roanoke transport operation would cost the company about $800,000, equal to 3 cents per share of its common stock. The company will take that charge against earnings in the fourth quarter.
Shore said financial results would be enhanced in the future as gross margins increase from 21.7 percent to 22 percent and operating margins increase from 11 percent to 11.3 percent.
The company's stock, traded on the Nasdaq stock market, closed Wednesday at $18.50 a share, up 12 1/2 cents.
LENGTH: Medium: 64 lines KEYWORDS: JOBCHEKby CNB