Reid: Nampak Leeds back in black after 2009 restructure

As well as the return to the black for the historically loss-making site, Reid revealed that the group was in a strong position to invest in new capacity and gave a positive outlook for the Nampak Plastics and Healthcare businesses in the coming 12 months.

Reid, who is managing director of Nampak Europe, was speaking to Packaging News after the South African parent company published annual figures showing a 61% drop in pre-tax profit despite a small rise in turnover.

While a poor performance in the global group’s corrugated business was highlighted as the main cause, the results statement also cited losses at the Leeds site and the collapse of Dairy Farmers of Britain, a major client of milk bottle producer Nampak Plastics, as factors in the drop.

Announcing the results, Nampak chief executive Andrew Marshall said that he would put the brakes on major capital expenditure projects in the coming year. Nampak has recently built a paper mill in South Africa and a canning line in Angola.

However, Reid said that the curb on large-scale investment would not affect Nampak Europe’s ability to reinvest in its own technology.

He said: “If we feel there is an opportunity to invest in new capacity then we will do that. Nampak will ensure it remains at the forefront of innovation and technology.”

He described the Leeds site as being “well invested [and] with a long history”, but said that in recent years its cost base had “crept up relative to competitors that haven’t been around as long”.

He said: “In the last year we’ve been tough on addressing this cost issue. We unfortunately had to eliminate a significant chunk of the labour cost and we renegotiated terms and conditions on areas like overtime and working practices. We’ve now balanced these costs and more recently the site is in the black.”

He also gave an optimistic outlook for Nampak Plastics, the milk bottle producer headed by managing director Eric Collins that lost a major customer this year when Dairy Farmers of Britain, the UK’s third-largest dairy, collapsed in August. The loss of work led to Nampak making 80 redundancies at its Newport Pagnell production facility.

Reid said: “Eric and his team acted quickly and the Dairy Farmers of Britain issue is now behind us.

“The business has also been very innovative in developing environmental solutions to include new packaging formats for current and new markets as well as having won a new inplant contract outside of mainland UK.”

He added that the former Storey Evans site in Bradford was now fully integrated into the Healthcare business and said: “We have benefited from the addition of some strong management resulting from that deal.”

On his outlook for the business in 2010, Reid said: “Healthcare has been pretty strong, as has food, and after some difficult decisions in the last 12 months we’re now well balanced. There is a sense of confidence for 2010 although we realise that the difficult economic situation ahead may be challenging.”

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