ATLANTA–Newell Rubbermaid has launched a number of strategic initiatives designed to decrease its exposure to commodity markets.
The moves include a restructuring of the company’s product portfolio that will include divesting, downsizing or exiting product categories that account for about $500 million in annual sales. It will also begin “more aggressive pricing,” as it said in a company statement, in the second half of this year. Prices increases in some product categories will be as high as 22 percent, Newell Rubbermaid said.
While the company’s Rubbermaid brand of goods is expected to most be affected, the company did not offer further specifics or immediately return phone calls.
Along with the price increases, Newell Rubbermaid will initiate a quarterly price-adjustment mechanism within its resin-intensive businesses in North America beginning on Jan. 1, 2009. The adjustment will be based on raw-materials indices and actual changes in raw-materials, processing and transportation costs.
In the statement, Mark Ketchum, Newell Rubbermaid’s president and chief executive officer, zeroed in on dramatic increases in costs, especially for resin. “Unfortunately, we don’t see this situation reversing course,” Ketchum said. “In categories where resin is a high percentage of cost of goods sold and the consumer’s willingness to pay for innovation is low, the economics are no longer viable.
“We have made considerable progress over the past several years in reducing the portion of our portfolio that is commoditylike,” he added. “However, in light of the raw-material hyperinflation we are experiencing, it is imperative we move rapidly to address additional product categories that cannot be differentiated sufficiently through strategic brand building to fit our business model.”
