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P&G Pulls Business from Erie Plastics: Who's to Blame?

March 10, 2008

Many years ago I toured the Erie Plastics factory in Corry, Pa, which is in northwestern Pennsylvania, close to the New York border. I had heard that Erie Plastics was a leader in multi-cavitation and stack molding. CEO P. C. Hoop (don’t call me Paul) Roche showed me closure tools with well over 100 cavities for closures. It was a poorly kept secret that Erie was a major supplier to Procter & Gamble over a very long time period. Erie participated in the design and manufacturing of the Folgers AromaSeal canister, as well as closures for Pringles cans and Downy Fabric Softener bottles. According to various news and employee reports on the Web, P&G had warned Erie Plastics it was going to pull the contracts three or four years ago. Engineers at Erie redoubled efforts to boost productivity and improve the economics of their processes. At the end of February about 40 percent of Erie Plastics’ employees were laid off, stunning many of them. Northwestern Pennsylvania is already taking a beating from the economy. The Tech Group laid off 250 employees at the end of last year, and closed a mold making plant in Erie, PA.  Bitter employees are blaming management at Erie Plastics, and one blogger even blamed Barack Obama.

 

The truth is laid-off employees have a very poor view of what was going on. P&G is in a global struggle for business and wants the best-possible costs and designs for its products. Presumably, P&G found a supplier it preferred, but had no immediate comment. I doubt the new supplier is Chinese because of reports concerning lack of sophistication and quality among domestic Chinese toolmakers. There’s still lots of hype from companies pushing Chinese tools, but proceed with caution.

 

Hoop Roche is the last person I would blame. The last time I saw him was last year at the Plastic Parts Innovation Conference in Memphis, TN. He was pushing a new proprietary technology from Erie Plastics called Pop ‘N Shake, which allows ingredients such as vitamins or medicines to be mixed right in the bottle. It’s a clever attempt to keep the business going. .It combines design ingenuity with high cavitation tooling and hot runner manifold know-how. Hoop joined Erie Plastics in 1972 as a sales engineer, and acquired the company in 1991. In his blog about Erie Plastics there is no update on the layoffs or the P&G contracts. He does give some hints of the troubles though: In a Christmas message on Dec. 23, Hoop lists these issues:

 

“• Challenging pricing driven by substantial industry over-capacity.
• Fiercely demanding customers ever confident that there is “another 20%” to be wrung out through negotiations, electronic auctions and allowing the competitive enterprise system to do its job.
• The never-ending quest to improve quality, output and productivity.
• Unremitting pressure on profit margins.”

 

All certainly true. I’ve written extensively about the P&G purchasing approach, and I know their corporate results are benefiting from a tough proactive system. They are not at all the leaders in the blitz to electronic auctions that began in 1999. Much to the contrary, they put a strong emphasis on design and quality, while also demanding the best possible prices. I have no knowledge of what happened with the Erie Plastics business, but I would not be at all surprised if the closure business is moving to Europe, despite the current disadvantage in currencies.

Posted by Doug Smock on March 10, 2008 | Comments (9)

December 8, 2008
In response to: P&G Pulls Business from Erie Plastics: Who's to Blame?
OUT OF JOB commented:

who cares it\’s all over now. 200+ employees lost there jobs and who\’s to blame? Hoop Roche for his arrogance and stupidity. He saw the signs, but him and Ron Walters got out w/ their money. Don\’t think so? Ask all the people that will have bad cradit or lose their houses because one or both memebers in their family worked at EP. Merry Christmas and Happy New Year as the Roche\’s live it up and are comfortable while many others struggle to survie.


June 18, 2008
In response to: P&G Pulls Business from Erie Plastics: Who's to Blame?
Former EP member commented:

It is true about the fantasy golf leagues, 2 people in Engineering used to play 2 or 3 hours per day. As for customer relations, on a couple of occasions was reputed to have told to “the un-named customer” that they needed Erie plastics more than Erie plastics needed them. How many times can you do that until you’re shown it’s not true.


May 6, 2008
In response to: P&G Pulls Business from Erie Plastics: Who's to Blame?
Former EP member commented:

Hoop should have spent more time paying attention to what his "loyal, filled with integrity, committed" members were doing: playing fantasy golf leagues, working for other injection molders designing products on EP time and equipment, painting plaster fish statues instead of working on projects. Bad employees are still there and good honest hardworking people who depended on these others are gone. THATS the shame!


May 2, 2008
In response to: P&G Pulls Business from Erie Plastics: Who's to Blame?
Observer commented:

Maybe old Hoop should have spent less time blogging and more time running a better and leaner business. How come the Company still runs with less 40% of the workforce? Maybe they weren't needed? Why didn't he try to diversify sales if P&G had been threatening to leave for 3-4 years? Were all the employees pulling their weight? Sometimes bad employees have to go - a tough choice in a small town but in the end everyone will suffer.


April 28, 2008
In response to: P&G Pulls Business from Erie Plastics: Who's to Blame?
Supplier to EP commented:

Having worked with members at EP, I can personally vouch for the intangibles - integrity, skill sets, commitment and loyalty. The loss of P&G work, albeit unfortunate, may be a chance to re-assess operations and come back stronger.


April 4, 2008
In response to: P&G Pulls Business from Erie Plastics: Who's to Blame?
Former EP member commented:

By the way, "Pop and Shake" or whatever they call it has been around for years in China. Another closure company I worked at was evaluating the same technology 5 years ago. It's not innovative when you're a copycat.


April 4, 2008
In response to: P&G Pulls Business from Erie Plastics: Who's to Blame?
Former EP member commented:

Hoop and EP are like a lot of homegrown, pull yourself up by the bootstraps companies that thrived when times were good, but never developed true business acumen or forward thinking, long term business strategies to be able to compete in tough markets. Alot of EP upper management crowed that EP was the best injection molder in the world, and while they did do some good things, please don't be so arrogant to believe that people who literally hopped off a tractor in a cornfield have the acumen to run a world class organization. They were (are?) inefficient, disorganized, and unwilling to change (if it wasn't thought of by a Corry person, it's a bad idea!). It's easy to be successful in good times, the key is to be able to make good decisions in tough times, and they weren't capable.


March 11, 2008
In response to: P&G Pulls Business from Erie Plastics: Who's to Blame?
EPmember commented:

The average EP member has heard all of the issues , updated weekly, for a long time. They have also heard an optimistic management team that has been encouraging them of the possibility of dodging the bullet. They just happened to be surprised when the day and the bullet came. What they haven't heard was the full measure of financial strain. Hoop made some risky choices, borrowed a lot of money and the economic situation caved in on him. Now I guess the bank is running things. I hope EP bounces back, but the situation is grave. What I can't understand is Hoop's absence. He was always willing to lecture others on "how to do it" when things went well. Now his President has suddenly retired and Hoop is missing from the scene. His absence implies his guilt, perhaps unfairly.


March 11, 2008
In response to: P&G Pulls Business from Erie Plastics: Who's to Blame?
Doug Smock commented:

For the record: P&G is transferring the business within the US.

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