Avon to build Ohio distribution centre

By Simon Pitman

- Last updated on GMT

Related tags: Investment, Avon

Direct sales beauty giant Avon says it is constructing a new
distribution center in Ohio that will deal with 50 per cent of the
company's total distribution requirements in the US by 2010.

The move comes as part of the company's significant restructuring program, which was implemented at the end of 2005, and which targeted investment in its distribution system worldwide as a means of increasing efficiencies and reducing costs. The $117m investment in the new Ohio facility will be located at a business park in Zanesville, 50 miles east of Colombus, a site that was chosen because of its central geographical location for some of the company's most important markets in the US. The company said that the decision to position the center in Ohio was taken after extensive research that took into account all aspects of the areas infrastructure, as well as collaboration from local authorities. "The central location with proximity to major highways and many of our suppliers will allow us to most effectively service our Representatives in a timely, efficient manner," said Elizabeth Smith, executive vice president, Avon Products. "The central location with proximity to major highways and many of our suppliers will allow us to most effectively service our Representatives in a timely, efficient manner," she added. The new facility is also expected to create 500 new jobs, after it is completed, some time in the middle of 2010. In January of this year Avon announced plans to restructure its US distribution operation as a means increasing efficiencies by investing in technologies. Ultimately the objective is to reduce production costs and then reinvest those saving into areas that will drive further growth, like product development, marketing and advertising - areas to which the company has also been turning its attentions to in recent months with increased emphasis. The investment in the new distribution facility means that current distribution facilities in Newark, DE, and Glenview, IL will be phased out in mid-2009 and mid-2010, the company said. Earlier this year Avon said it was on track to bring about savings of approximately $400m from its Strategic Sourcing Initiative (SSI) in the course of the next few years. Confirmation that the SSI program is on course leads the company to believe that total savings from its restructuring program, first announced in the last quarter of 2005, should total $700m. This figure takes into consideration the fact that the original restructuring program is on track to make savings of $300m. The company estimates that SSI will start realizing significant cost savings during the second half of 2007, with those savings set to amount to $200m a year by 2009.

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