NEW ORLEANS (AP) — The decision by consumer products giant Procter & Gamble Co. to spin off its Folgers coffee business into an independent company could open the way for expansion of its New Orleans roasting plant and more jobs, a Port of New Orleans official said Thursday.
Cincinnati-based P&G has about 1,250 employees in its U.S. Folgers operations, including 440 at the New Orleans roasting plant, the company's largest. Other roasting plants are in Kansas City, Mo., and Sherman, Texas. The company had sales of about $1.6 billion in 2007.
P&G unveiled its spinoff plans Thursday as it announced a 14 percent increase in fiscal second-quarter earnings.
The port keeps a close eye on Folgers because coffee bean imports for roasters — including Folgers — average 250,000 to 300,000 tons a year, said Robert Landry, the port's marketing director. An increasing amount of coffee, primarily from Vietnam, is being shipped in by rail from West Coast ports, he said.
Landry said Folgers is a major customer, though he did not have precise data.
Unlike such products as rubber and steel that are shipped elsewhere from New Orleans, Folgers' plant increases the regional economic value of coffee shipments, he said. For example, Folgers' plastic containers are manufactured in nearby Hammond, he said.
''Everything that can be done to coffee is done here,'' Landry said. ''It's shipped here, roasted here and packed here. It has a tremendous economic impact.''
In the past, major company changes have often boded ill for New Orleans, which has typically been the target of downsizing in multilocation organizations. But the Folgers spinoff, Landry said, opens the door to expansion talks with closer-to-the product management.
''A lot of people are paranoid,'' he said. ''But can now go to the Folgers people directly about expanding the plant and bringing more jobs here.''
After Hurricane Katrina struck on Aug. 29, 2005, Folgers did not resume full production for 11 weeks. P&G set up a trailer village to provide employee housing at the site. Coffee supplies were disrupted, causing some shortages. But in late 2005, P&G said it was committed to New Orleans, where it has had a presence for more than 50 years.
Folgers spokesman Bryan Brown said Thursday that the company was in ''close touch'' with New Orleans-area officials about the spinoff.
''We're excited about the news for our overall coffee business, including our people, brands and facilities,'' Brown said. ''We're excited about growing this business.''
Folgers has been the nation's No. 1 ground coffee brand and is among P&G's biggest sellers, but has faced increased competition from Starbucks and other coffee-makers. The spinoff is a continuation of P&G's strategy to get out of direct domestic manufacturing and focus on marketing of finished products.
In the past decade, P&G has sold several brands, including Jif peanut butter to J.M. Smucker Co. and Sunny Delight juice drinks to a private equity firm that formed a standalone company.
P&G said it hasn't decided on the form of the Folgers separation, but was leaning toward giving its shareholders the option of exchanging P&G shares for shares in the new company.
