--GlaxoSmithKline ends tablet packaging operations in
Melbourne
--Cites high A$, labor costs for closure
--Company will focus on making more sophisticated products
(Adds reason for the closure, background on manufacturing
downturn throughout)
By Ross Kelly
SYDNEY--GlaxoSmithKline PLC (GSK) said it would close an
Australian tablet-packaging facility and lay off 120 workers,
joining a string of manufacturers that have shut factories, slashed
jobs and relocated production overseas in response to high labor
costs and a strong local currency.
The U.K.-based pharmaceutical giant said the Melbourne plant
would now focus on making more specialized products such as
packaging for respiratory treatments and sterile containers for
medicines.
Manufacturing in Australia has been in long-term decline, in
part because the Australian dollar has been at close to 30-year
high against the U.S. dollar for more than two years, making
exports uncompetitive. As a share of the economy, manufacturing
stands at around 7%, down from 30% in the 1950s.
The Aussie dollar has fallen 5% so far this month following a
surprise rate cut by the country's central bank that took the
nation's key interest rate to a record low 2.75%. But it is still
trading at about 98 U.S. cents, compared with low of about 60 U.S.
cents in late 2008 in the wake of the global financial crisis.
General Motors Co.'s (GM) Australian unit said last month it was
cutting 500 jobs, or about 12% of its workforce, citing pressure
from the nation's strong currency and intense competition in the
local automobile market.
Coca-Cola Amatil Ltd. (CCL.AU), which distributes Coca-Cola
Co.'s beverages in Australia, and Casella Wines, which makes the
nation's mass-market Yellow Tail wine, have also warned in recent
weeks that the Aussie dollar's strength is hurting earnings by
making their products less competitive against overseas rivals.
A spokeswoman for GlaxoSmithKline said a manufacturing plant in
Sydney would be unaffected by the Melbourne closure. The Sydney
facility, which makes packaging for over-the-counter painkillers,
was restructured 18 months ago to make it more efficient, she
added.
Write to Ross Kelly at ross.kelly@wsj.com
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