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

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.