Alcan to close Syracuse plant

By Gareth Macdonald

- Last updated on GMT

Related tags Alcan Alcan packaging Rio tinto group

Alcan Packaging’s decision to close its packaging production facility in Nebraska, US, at a cost of 71 jobs, follows just weeks after parent company, Australian mining giant Rio Tinto, announced some 14,000 lay offs.

While Alcan has yet to issue a statement on the closure, local media organisations report that the firm has notified Nebraska Department of Labor officials that the Syracuse facility will be closed early next year.

Operations at the plant, which makes packaging for the drug and cosmetics industries, have been continually scaled-back since 2002, when as many as 150 manufacturing staff were employed.

Alcan’s plans also strengthen the argument that it is shifting focus to concentrate on the Asian pharmaceutical industry and outsourcing markets.

The most recent evidence for this came from the firm’s October acquisition of a production facility in Chakan, India’s Maharashtra state as well as the its inauguration of a $10m production plant in Haridwar in the North of the country in June.

Speaking at the opening of the Haridwar plant, company CEO Ilene Gordon said that: "The dynamic Indian market represents an attractive opportunity for Alcan Packaging's strategy of growth​.”

The dreams of Rio to grand?

When Rio paid $38bn for Alcan in 2007 is said it would finance the deal by hiving off non-core assets, like the latter’s packaging operations, in a $15bn divestiture plan.

As yet however no deal has been made, despite expressions of interest from companies like Amcor and private equity firms Apollo Global Management and Bain Capital.

Indeed, according to a report in the UK’s Guardian​ newspaper last week. Rio has only made back $3bn by selling off parts of Alcan since January, meaning that its debts are roughly $37bn.

This high level of debt, coupled with the current global downturn and slump in metals prices, has led some to question the wisdom of the Alcan deal in the first place.

Rio’s predicament is also attracting interest from those wishing to make hostile takeovers. Earlier this year for example, BHP Billiton tabled all-share bid for Rio but subsequently decided to abandon the plan in November.

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