A slowdown in North American business and a high inventory in China has led to more than 30 employees to be laid off at a Zippo plant.
On Monday, Zippo Manufacturing Co. announced that 38 workers had been laid off at the iconic Zippo lighter factory in Bradford, PA. The company now has 533 workers.
Zippo president and CEO Mark Paup told the Bradford Era that the layoff is permanent. Paup said the company used to have an importer in Hong Kong that would buy the product and ship to China. However, when the contract expired Zippo decided to take it over themselves.
“We had so many problems with black market and gray market product (genuine products that are smuggled into the country),” he told the Era. “We felt as a brand owner we needed to take control of the distribution, the logistics and set up operations over there so we could control the channels and how the product was being sold.”
Paup admitted that after taking control, they weren’t sure how much inventory was needed in China.
“We were very aggressive with our load-in on inventory,” he said.
However, the needed China inventory estimates were too high and Paup says they realize they have too much inventory over there.
“We can’t afford to carry all that inventory. Right now we’re readjusting — slowly — that inventory,” he said.
In addition to the surplus inventory in China, the company has also experienced a slowdown in North America creating a need to adjust the staffing levels. Anti-smoking campaigns have also hurt Zippo’s sales. Paup said the decision to let workers go is never easy and officials explore other options before making the decision.
“What we tried to do last year when we knew we had to adjust the inventories, we had a leave. We called it a ‘cold-weather leave’ where employees could voluntarily sign up,” he told the Era.
More than 30 workers took the voluntary leave last year, which Zippo offered again this year. All employees were called back before the layoffs, which went by seniority, in order to keep critical areas staffed enough to run, Paup said. Nineteen employees opted for early retirement that was offered.
There is a sliver of good news however. Paup said business at W.R. Case & Sons Cutlery Co. — owned by Zippo — is looking up after some difficulties last year. Case has brought back 12 workers.