Local plastic packaging firm shuts down due to high costs

The continuing tariff differential between raw material inputs for plastic manufacturing and finished plastics products has taken its toll on one local plastic packaging firm, which decided to shut down operations and resort to imports.

In a statement, Alcan Packaging Starpack Corp. said it has decided to stop its food packaging manufacturing operations in the country and instead focus on tobacco packaging.

Alcan supplies Nestle multinational food giant Corp. its flexible pouches for its powdered beverage products such as Milo and Nescafe.

Alcan’s decision to stop its food packaging manufacturing operations in the country is causing increasing concern to the local plastics industry, which foresees more closures if government decides to protect one petrochemical firm with the maintenance of high tariff rates on petrochemical resins, creating a distortion against finished plastic products which now carry a lower tariff rate.

In a letter informing clients of its decision, Austen Kernohan, president of Alcan Packaging, explained that ‘the high cost structure, together with price pressure in the market, are key elements that have driven the company to take this difficult decision to discontinue the food flexible packaging manufacturing operations in Manila."

However, Kernohan assured its other customers that their "business needs in the Philippines are important to us and will be met through our Alcan Packaging facilities in Asia."

Alcan employs about 300 workers. It did not say how many of its workers would be retrenched since it would continue with its tobacco packaging operations.

Alcan is a subsidiary of Alcan Inc., a multinational, market-driven company and a global leader in aluminum and packaging with world-class operations in primary aluminum, fabricated aluminum as well as flexible and specialty packaging, aerospace applications, bauxite mining and alumina processing.

The parent company is based in Montreal, Canada and has facilities in 55 countries.

The plastics industry is hoping that Alcan’s decision will be taken into consideration by the Cabinet-level Tariff and Related Matters as it reviews the petition of the Association of Petrochemical Manufacturers of the Philippines and JG Summit Petrochemical Corp. to maintain the tariff cover on 11 petrochemical resins also used as raw material inputs by the downstream plastics industry.