THE world's leading glass packaging supplier, Owens-Illinois, could again be forced to shrink its Australia operations, leading to potential job losses, as the US manufacturing giant cites a sluggish local beer and wine market and protracted major customer and union contracts for the uncertainty hanging over its business.
Addressing investors in the US last week on the release of its second-quarter earnings, Owens-Illinois chairman and CEO Albert Stroucken said that despite improved profitability at its Australian arm thanks to a $25 million restructure last year, the company would still face headwinds from Australia's gloomy consumer confidence.
''We expect lower consumer confidence or low consumer confidence and high personal savings rates will continue to weigh down the wine and beer markets in Australia and New Zealand,'' Mr Stroucken told US investors.
Mr Stroucken, who late last year used the term ''recession'' to describe the mood of local shoppers, said local profitability had improved following a $25 million restructure that cut jobs and shut down excess capacity, but the shipment levels in the Asia-Pacific operations were down nearly 6 per cent in the second quarter.
Despite the Asia-Pacific operating profit nearly doubling from $US9 million ($8.58 million) in the quarter to $US16 million, a protracted slowdown in sales of beer and wine in Australia meant Owens-Illinois might have to revisit redundancies and plant closures soon. Incomplete sales contracts with large customers, presumably leading brewers Foster's, Lion Nathan and wine groups, together with union deals, were also weighing on the company.
Read more at Brisbanetimes.com.au
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