When Georgia-Pacific announced in January that it would close its longtime Dixie cup manufacturing plant in Forks Township and fold the operation into an existing site in Kentucky, the company attributed the grim news to a pandemic-induced slowdown in demand for its paper cups, as well as a need to stay competitive with rivals.
In addition, the plant’s fate was sealed partly due to the effect of competitors outsourcing manufacturing processes, according to a petition filed this month with the federal Office of Trade Adjustment Assistance by the union that represents many of the 190 workers at the Forks plant who will lose their jobs by the end of 2021. Georgia-Pacific, the petition states, also “has outsourced some cup lids manufacturing molds to China recently.”
Georgia-Pacific spokesperson Tom Strother said the petition’s use of the term “recently” is misleading in this case, noting that it’s been three years since the company last outsourced some plastic products made at the Forks plant to international markets.
“While we have outsourced some lid manufacturing in the past, the last outsourcing of this type from Lehigh Valley was in 2018,” he said. “All of the lids currently being produced at the Lehigh Valley facility will be moving to Lexington. Nothing has changed in that regard.”
The petition, filed March 2 by an United Steelworkers official, is listed online as under investigation until the U.S. Labor Department makes a determination to certify or deny the petition. The TAA program provides benefits and support to workers who lose their jobs due to the impact of international trade, help that includes job training, income support, job search help and relocation allowances.
The Forks plant, which dates to 1964 and is just one part of Dixie’s long history in the Lehigh Valley, will gradually close throughout the year as the company prepares to relocate some of the operation’s equipment to Kentucky. The first wave of job separations, according to a notice filed with Pennsylvania to comply with the Worker Adjustment and Retraining Notification Act, includes 17 workers who will lose their jobs by April 7. As of Friday, Strother said four positions have been eliminated so far.
The impact of foreign competition and outsourcing of American manufacturing jobs remains a hot-button topic that lingers from administration to administration as each new president tries to solve the riddle of reshoring production.
“It is a bipartisan failure of public policy dating back at least two or three decades,” said Robert E. Scott, a senior economist and director of trade and manufacturing policy research at the Economic Policy Institute, a Washington, D.C., a think tank that seeks to include the needs of low- and middle-income workers in economic policy discussions.
Amid the various policies, the United States has seen a net loss of manufacturing plants every year from 1998 through 2018, according to U.S. Census Bureau data included in an August report that Scott authored. Overall, the report notes, the United States has had a net loss of more than 91,000 manufacturing plants and nearly 5 million manufacturing jobs since 1997.
Manufacturing is still a major U.S. sector, employing 12 million people, but Scott argues it could be stronger and add a significant number of jobs if the country reforms its trade policy, curbs dollar overvaluation and invests in infrastructure and clean energy.
The Lehigh Valley’s manufacturing sector has been strong, but hasn’t been immune to losses similar to the impending closure of the Dixie cup plant, such as the 2016 closure of the Kraft Heinz plant in Upper Macungie Township after some production was shifted to Canada, or the 2018 loss of the Schutt helmet reconditioning facility in Palmer Township following the outsourcing of work to Mexico.
But the area also has had plenty of recent gains, particularly within food-and-beverage manufacturing and other companies lured here by the region’s attractive distribution network. For example, the Kraft site was turned into a 1.5 million-square-foot manufacturing, warehouse and distribution operation for Keurig Dr Pepper.
In fact, manufacturing is the Lehigh Valley’s second-largest sector, generating $7.1 billion in economic output in 2019, according to the Lehigh Valley Economic Development Corp..
Pa., local petitions
So far this year, 15 petitions in Pennsylvania have been posted on the Trade Adjustment Assistance website, with 10 investigations underway, four that have been certified and one termination.
Of the petitions in 2020, several in the Lehigh Valley were certified, making affected workers eligible to apply for adjustment assistance by a specified date. Namely:
Workers of Ledvance LLC, including on-site leased workers, were deemed eligible to apply for assistance following a petition that said products that used to be manufactured at a site in Bethlehem Township were “now being imported from China and are being sent to more efficient locations.” Ledvance, a lighting company formerly part of Osram Sylvania, closed its Bethlehem Township site by July 17, costing 52 jobs.
Eleven workers at swimwear maker A&H Sportswear Co. Inc. in Stockertown lost their jobs after fabric-cutting services were outsourced to a foreign country, according to a petition filed in July by company officials. The petition was certified on Aug. 30.
A company official with Upper Saucon Township-based Olympus Corp. of the Americas filed a petition on March 31, 2020, on behalf of 65 information technology employees working at multiple U.S. sites. The petition, which was certified Feb. 28, 2021, said the company was outsourcing the IT infrastructure to India-based WiPro, resulting in some work previously done in the United States relocating to India and Mexico.
In a statement to The Morning Call on Friday, Olympus said the transition to third-party provider WiPro was geared toward improving efficiencies and modernizing the company’s IT system. The Morning Call in November 2019 reported Olympus was eliminating an unspecified number of IT positions as part of a larger corporate strategy.
Affected employees, the company said, were provided opportunities to explore other positions with Olympus or the third-party provider. Those who could not obtain other employment were provided with job placement and retraining assistance, along with severance pay and benefits, the company said.
“We estimate that a full third of the employees who were part of the initial petition and who are located across the United States, in Mexico and in Canada, found placement either at Olympus or with WiPro,” the company said.
Dixie plant
In addition to pointing out the effect of foreign competition, the Dixie workers’ union petition also points out that the Forks plant is closing and consolidating with the Kentucky plant “due to lack of demand impacted by COVID-19.”
The pandemic, by minimizing public gatherings, halting events and forcing many office employees to work from home, cut into sales for paper cups and opened the door for Georgia-Pacific to relocate operations under one roof as it attempts to bolster its competitive stance in the industry. Spokesperson Strother confirmed to The Morning Call in January that the company had seen a decrease in consumption for the Dixie to Go/PerfecTouch cup and the snap-on lids made at the Forks plant.
Many of Georgia-Pacific’s peers also have consolidated facilities over the last decade, Charles Gross, a senior equity analyst with Morningstar who covers the paper packaging industry, told The Morning Call in January.
“Ultimately most of these products can be considered ‘commodities,’ and it’s a constant race to lower your costs faster than the competition,” he said.
Strother reiterated Friday that Georgia-Pacific continues to operate the Forks facility “as normal” and expects to continue to do so into late 2021 while it transitions production and some equipment to Kentucky. All 190 employees will ultimately be affected, separations that will occur in waves, with the final 116 workers being let go between Dec. 15 and Dec. 28, according to the WARN notice filed with Pennsylvania.
“Georgia-Pacific is working with affected employees on transitions to other opportunities within Georgia-Pacific or other Koch companies, or opportunities outside of the company,” Strother said. “We will also continue working with local community and state agencies that can provide additional transitional support to employees.”
The future of the Forks property, a 36-acre tract at 605 Kuebler Road, also remains unclear. Georgia-Pacific owns the property and will decide what’s next for the property toward the end of 2021, after cup-making operations have ended.
As for the large Dixie cup out front, Strother said that was previously used as part of the facility’s fire suppression system. As technology advanced, he said, the tank was no longer needed as part of that system.
The cup remains in place today but no longer contains water. “The plan is for it to remain on site,” he said.
Morning Call reporter Jon Harris can be reached at 484-280-2866 or at jon.harris@mcall.com.
