Urbana Solo Facility: Two Lost Time Fires In A Fortnight -- While I Was Away

As I mentioned before I left the country, right here, it is [now doubly-] disconcerting to see so many lost time fires in one facility. I do understand that a high volume plastic thermal forming plant is more prone to fires than some other types of manufacturing facilities, but two in just 14 elapsed days is. . . well, troubling. Here's the local paper on it -- do go read it all:

. . .Urbana Fire Chief Mike Dilley said a combination of sprinkler heads inside the plant at 1505 E. Main St. and firefirefighters' hose lines kept the fire from being any worse than it was.

An automated alarm sounded at 11:08 a.m.

"We got inside and encountered heavy black smoke in the back end toward the south side," he said. . . .

On July 19, a spark from a welder's torch started a fire on a loading dock about 8:30 a.m. The fire, which was quickly extinguished, prompted the evacuation of the building. Workers were out of the building about an hour while smoke was sucked from the plant. Damage was estimated at $25,000.

"This was a much worse fire," said Dilley. "In a few more minutes it would have been really devastating. There is damaged machinery and an extensive amount of smoke damage in that general area."

[Solo spokeswoman] Gorman said it was too early to put a dollar estimate on the damage from Thursday's fire. . . .

I'd love to have been a fly on the wall when the new Dart Container owners -- their risk management people, actually -- got the news of this second fire in Urbana. It required additional fire department responses to get it squared away. I also wonder what will happen to the rates on Dart's coverage for the facility. Is this a sign of a distracted workforce? Who knows? But in high-throughput of thermal formed plastic goods, fire safety has to be Job One. So much can happen so fast, with so much combustible material moving around the floor -- and it can quickly become uncontollable (as Solo well knows from its complete loss of a South Side of Chicago facility about 5 years ago).

Let's be careful out there, folks -- or the Dart family will have to relocate these manufacturing facilities to the Caymans, as well (not just the present financial/tax haven operations).

I Guess That Makes Two "Lost Time" Fires Already This Year: Urbana Plant Latest One

That makes three in the last two years, and two this year alone. This fire looks to have possibly damaged as much as $100,000 worth of inventory, due to the amount of smoke inside the working areas of this substantial cup-forming line facility. Ouch.

Here is a bit from the local Urbana weekend press report (do go read it all):

. . .Dilley said the quick thinking of the welder to shut the door, together with the workers using fire extinguishers and the activated sprinkler head "averted what could have been a very big fire."

Dilley said the entire plant was evacuated. In less than an hour, several workers were allowed back in and were assisting with the cleanup.

He described damage to the dock as moderate, estimating it at $25,000, but said the loss of inventory inside due to the smoke would likely be greater.

"I don't even know where to begin," he said of the product inside.

No one was injured, he said. . . .

Seriously, folks -- let's be careful out there -- the Dart people didn't buy you for the insurance proceeds. [End, snark portion.]

"Stupidest Song. Ever." Now Double-Platinum

Mr. Toby Keith has repeatedly called his binge drinking-anthem "Red Solo Cup" the stupidest song he's ever heard. But he is certainly happy he didn't overestimate the intelligence of ordinary Americans. They are drinking it right up.

Per the online Taste of Country news outlet, tonight:

. . .Never underestimate the power of partying. Toby Keith’s party-hearty anthem ‘Red Solo Cup’ has been certified double platinum by the RIAA after selling two million digital downloads, which also makes it Keith’s career top seller. The news comes just six months after the song was certified as the first platinum single of the his career in January. . . .

And so, as the independent Solo Cup company fades into the western sunsets -- just as the old West horse-culture did, about a century and a quarter ago -- we'll always have Mr. Keith's immortal classic to remember Korzenski and crew by. Proceed to party, cup-pups!

Ah -- I remember it well.

Fascinating: Comparing Solo's Social Circle Incentives -- To Baxter's Arrival In Stanton Springs, Georgia

It seems that the bigger (med device) fish can cut better tax incentive/abatement deals (than red plastic cup companies can) -- read it all here:

. . .The potential windfall expected with the arrival of Baxter International at the Stanton Springs industrial park won’t have much effect on area schools for some time as the Walton County Board of Education was asked to sign off on an agreement abating school taxes on the business for the next 10 years.

While the 10-year tax abatement scheme has become more common in recent years to attract various businesses to the area — the Walmart Distribution Center in Monroe, Solo Cup and General Mills in Social Circle — the agreement has only ever applied to property taxes as levied by the county government. This will be the first time a Walton project will also abate school taxes as well.

Tommy Craig, a Newton County lawyer who represents the Four County Development Authority, said it happened as part of the negotiations with Baxter. . . .

As I say -- fascinating -- both Illinois-based companies with large footprints in the South.

Will Pactiv Still Be Able To Press Dart/Solo -- Via Price Competition -- In the US?

File this one under "Saturday morning thoughts -- over coffee": It is still very clear that Pactiv is the 800 pound gorilla in the US, with its Hefty^TM line of plastic-ware, even after yesterday's news. It was also clear, historically, that Pactiv could press both Dart and Solo to match its (generally lower) price-points, or lose share, in the US, at least.

I think that will continue. I think Dart/Solo is fairly highly-levered, and can't really afford to try to "wait Pactiv out", to recover prior margin erosion. And my hunch is that Pactiv won't waste too much more time before touching up pricing -- to put additional pressure on the newly-combined company's margins.

Even though the Dart family says (officially) that by virtue of being privately held, it can take its time to get the integrated company's costs in line -- it may not have that luxury. Pactiv is likely to begin to cut price and steal share, just to force Dart/Solo's hand here. We shall see.

I may not post as many items here -- or as often -- as I used to, now that the deal is done. We will see whether either the Dart family directly, or the company generally does anything interesting about the special $500,000 bonuses, for example -- that might warrant some additional probing.

Stay tuned -- and anonymous tips are forever welcome.

Plastics News' Take: No. 3 Bought No. 2 -- In Thermo-Forming -- But Pactiv Is Still King

This trade/industry report on today's news struck me as interesting. It suggests (by implication) that the Administration just doesn't really need to address the US thermo-formed markets, in any great detail, here -- from a merger review perspective. Afterall, Pactiv will always be able to compete on price -- at triple the size of the combined Dart-Solo. And I suppose that's right.

[I'd rather that DoJ/FTC spend its scarce resources on keeping the 'net competitive and free, actually.]

So -- do go read all of the Plastics News piece -- but here's a bit:

. . .Solo was the second-largest thermoformer in North America, with estimated related sales of $790 million, according to a recent Plastics News ranking. Dart was the third-largest, with thermoforming sales of $480 million.

Pactiv Foodservice remains the dominant player, with thermoforming sales estimated at $3.2 billion. . . .

Interesting.

Dart-Solo Closed -- Debt Called For "Make-Whole" Redemption.

Not with a bang -- but a whimper.

Apparently Solo and Dart don't do enough business in the other jurisdictions to trigger a pre-merger filing.

Most importantly, for those speculators in the thinkly-traded Solo high-coupon debt, the highest-coupon legacy Solo debt is being called -- under a make whole redemption (as required by the indenture, in a change of control setting):

. . .All of Solo's outstanding 10.5% Senior Secured Notes due 2013 and 8.5% Senior Subordinated Notes due 2014 have been called for redemption at 100% of the principal amount plus accrued and unpaid interest to their respective redemption dates of May 21, 2012 and June 4, 2012. In addition, all funds necessary to pay the redemption price have been deposited with the trustee under the indentures pursuant to which such notes were issued and, accordingly, the indentures and the notes have been satisfied and discharged in accordance with their terms. . . .

Ah -- so it goes.