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VOL. 126 | NO. 104 | Friday, May 27, 2011

Cleo Wrap Plant to Close by End of Year

By Bill Dries

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For nearly 60 years, Cleo Wrap has been a part of the city’s post-World War II manufacturing foundation.

The plant, which makes gift wrap, has held on as other factories and plants of the era went under in the 1970s and 1980s. And it has its share of layoffs, cutbacks and other economic scars to show for its longevity.

Executives of Philadelphia-based CSS Industries Inc., the plant’s owner, announced Wednesday, May 25, they have decided to close the Memphis plant by the end of this year.

A call to CSS Industries’ office was not returned by press time, and it is unclear how many jobs will be lost in Memphis.

“As part of such closing, the company plans to transition the sourcing of all gift-wrap products to foreign suppliers,” reads a press release issued Wednesday by CSS.

CSS president and chief executive officer Christopher J. Munyan termed the plant closure a “difficult” decision, citing the plant’s historic role in the Memphis economy over several decades.

“However, we believe that this action will enable the company to more effectively respond to the changing requirements of our customers,” Munyan said in a written statement.

CSS combined Cleo operations with Berwick Offray, another gift-products subsidiary, in 2007.

The Memphis plant has been the primary manufacturer of gift wrap for CSS. The Memphis plant does everything from web printing to packaging of the gift wrap.

Cleo is one of 13 manufacturing or distribution facilities in seven states that CSS has.

The CSS 2010 annual report includes a breakdown of the products each makes.

Every category but floral accessories made in Milford, N.H., includes details of materials or manufactured items bought by CSS and imported from Asia or Mexico.

The description of the gift-wrap division describes the dominant role played by the Memphis plant. But it also notes a “small portion” of gift wrap is imported from Asia.

Noting the impact of competitor products from Taiwan and China, CSS in 2009 petitioned the federal government to impose antidumping duties on the foreign-made competing products.

CSS closed plants in 2008 in Elysburg, Pa., and Troy, Pa., citing foreign competition.

As recently as a few years ago, Cleo Inc. billed itself as the world’s largest manufacturer of Christmas gift wrap, making 2 billion feet of the stuff each year. Over 58 years, that represents a lot of changes in American culture from a time when Santa Claus was always white to gift wrap for observations of Kwanzaa and other multicultural traditions. The company has made other types of gift wrap for different occasions, using Disney and other trademarked characters over the decades that have been favorites of different generations of children.

Cleo was also a pioneer in the use of water-based inks and changes in its production methods that came with the switch to more green production methods.

Cleo began in 1953 as Memphis Converting Co., founded by Charles L. Wurtzburger and his family. It was a time of innovation and expansion in the Memphis economy.

Cleo was already experiencing the constant change that would become a fact of life for all corporations of its kind in the 1980s and beyond.

CIT Financial bought Cleo in 1964 when it also bought Gibson Greeting Cards Inc.

After RCA Corp. bought CIT in 1980, Gibson’s front office and Wesray Corp. bought Gibson from RCA and Cleo became part of Wesray as well.

In the mid 1990s, Gibson had numerous problems, including operating losses for the Cleo divisions, which then included plants in other cities. In 1994, Gibson executives said Cleo’s year-end inventory had been overstated by $8.8 million. There were five lawsuits filed against Gibson by stockholders for violating federal security laws. Gibson sued its banks during the legal melee and announced a $35 million loss for 1994, most of it attributed to the Cleo division.

The company’s volatile cycle continued through the 2010 annual report from CSS. The report describes the year for the company as “disappointing.” Sales were down as was net income. The company attributed much of its trouble to the impact of the national economic recession on spending for Christmas.

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