Swallowfield to restructure operations
overhaul business in a bid to reposition itself as an international
supplier of contract outsourcing services to the toiletry,
household and cosmetics markets. Operations for less complex
products are to move to lower cost locations across the globe.
As part of this overhaul, Swallowfield is to combine its aerosols and cosmetics businesses, move some of its production to cheaper countries and open a procurement office in China.
Swallowfield claims the changes should generate savings of £0.4 million in the next financial year, and annual savings of £0.5 million after that.
"The move will enable us to focus on providing customers with high quality, innovative, value for money products by using our design creativity, management and production skills in a more cost effective manner," said Swallowfield's managing director Tony Wardell.
Production facilities are to be maintained at Bideford in England, for the manufacture of what the company described as 'high quality' products.
The company, which supplies cosmetic products to Marks & Spencer, said the Bideford site has operated as a stand alone profit centre since its acquisition in 1989, demonstrating 'sound profitability' throughout the 1990s.
Since 1999 however the company claims that profitability has been 'seriously eroded' by weak market volumes and staff competition from the UK and abroad.
Over the next two years therefore, Swallowfield is to develop a network of partners in lower cost locations for the manufacture of 'less complex' products.
The planned procurement office in China, which it will operate in partnership with its UK-based procurement teams, will cost about £0.2 million per year but is expected to begin to make a significant net contribution to the group's results in 18 months time.
The changes will cost about £0.4 million, the majority of which will be charged against this year's results.
