Arkansas economic development officials are in near daily contact with Kimberly Clark leaders as the state is considering all options to save a Conway manufacturing facility and its 350 jobs.
Earlier this month, Kimberly Clark surprised Arkansas and local officials when they revealed the Conway facility had a “50-50” shot of being closed. Kimberly Clark’s Conway plant has been located in central Arkansas for nearly 50 years and produces feminine hygiene products. It also operates a Maumelle plant that makes baby wipes. In January, when Kimberly Clark announced it would make 5,000 job cuts worldwide, the Conway location was told it was safe.
Wisconsin is home to a manufacturing plant that makes similar products to Conway’s. It was notified in January it could be closed and since then Wisconsin leaders have worked on an economic incentive package that includes a potential $101 million to $117 million in wage incentives, state payments for 15% of factory upgrades, and sales tax waivers on equipment upgrades. The Wisconsin plant employs 600 workers.
This week, Kimberly Clark made what is described as “headway” with its workers’ labor union in Wisconsin, and while details of any compromise were not revealed, it has revived the state pitch that was stalled in the legislature to save the plant.
Arkansas economic leaders are hoping the Natural State’s “right to work” status – which does not require workers to join unions–- will be a selling point for keeping Conway’s 350 workers on the payroll.
“The dynamics really come down to ‘hey, we’re a right to work state. We’re a non-unionized facility,'” Arkansas Economic Development Commission Executive Director Mike Preston tells Talk Business & Politics.
In addition to the Conway plant, Kimberly Clark has a Maumelle facility that employs an additional 300 workers. It is not in the discussion for closure, but Preston sees it as an advantage in making the Arkansas pitch.
“The issues to me that you run into as a company are you have two facilities making the same lines. If you close one of the them – a non-union one – and you’re left with one facility making all this product line, it’s at risk of a strike and being shut down, and then your largest customer like a Walmart is out of that product line that they’re used to getting,” he said.
Preston said Gov. Asa Hutchinson has had multiple conversations with Kimberly Clark executives and is making a personal commitment to save the Conway facility. Local economic officials echo the appreciation that Hutchinson and the state are as engaged as they have been.
“The state has been fully engaged from AEDC all the way up to the governor. As a community fighting for these jobs, you can’t ask for more,” said Brad Lacy, Conway Chamber of Commerce CEO.
After seeing the major incentives Wisconsin is considering, Preston said the state has to protect its taxpayers with a responsible incentive proposal. Those details have not been finalized, and they could be adjusted if the Wisconsin legislature ever completes its debate of the proposal that is hanging in uncertainty in that state’s senate chamber. In the meantime, the AEDC chief said Arkansas is operating on a “parallel track” to assist the Kimberly Clark workers.
“First and foremost, we want to do what we can to keep this [Conway] facility open,” Preston said. “Realizing that the company does have a decision to make, they’ve been public about needing to downsize and close some facilities. If it does come to that, what do we do if that’s the case?
“We’re already looking at if we can get additional product lines into the Maumelle facility and grow that facility so there can be a soft landing for those folks who might get displaced from Conway. Also, what other industries are looking to hire in the central Arkansas area?” he added.
The Conway plant was upgraded in 2010 and the Maumelle facility was updated in 2015. Kimberly Clark employs approximately 43,000 workers worldwide. Share prices (NYSE: KMB) for the Irving, Texas-based manufacturer closed Friday at $108.04, down 2 cents. During the past 52 weeks the share price has ranged between $97.10 and $124.15.
On Tuesday (July 24) the company reported second quarter net income of $455 million, down 14% compared with the same quarter in 2017. Total revenue during the quarter was $4.604 billion, better than the $4.576 billion in the same quarter of 2017. For the first half of 2018, net income is $548 million, down 50% compared with $1.094 billion during the same period in 2017.
“In January 2018, Kimberly-Clark initiated the 2018 Global Restructuring Program in order to reduce the company’s structural cost base and enhance the company’s flexibility to invest in its brands, growth initiatives and capabilities critical to delivering future growth,” the company noted in its second quarter earnings report. “The program will make Kimberly-Clark’s overhead organization structure and manufacturing supply chain less complex and more efficient and is expected to broadly impact all of the company’s business segments and organizations in each major geography. The company expects the program will generate annual pre-tax cost savings of $500 to $550 million by the end of 2021, driven by workforce reductions along with manufacturing supply chain efficiencies.”