Gerber Changes Its Cloth Diaper Business, Cuts Jobs
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FREMONT, Mich. — Gerber Products Co., one of the nation’s leading makers of cloth diapers, said Monday that it was drastically reducing that line of business because of foreign competition and the popularity of disposables.
The cutback will eliminate 900 jobs from the company’s apparel operations and result in a one-time $16-million charge against earnings, or 43 cents a share, to pay for the costs of the retrenchment, Gerber said.
Apparel making at Gerber factories in Pelzer, S.C., Emprata, Pa., and Tempe, Ariz., will be affected by the cutback. Gerber will now make diapers from imported cloth instead of weaving them from scratch in the United States.
Low-cost weaved cloth from China and India have virtually captured the business from diaper services and hospitals, spokesman Tim Croasdaile said.
Gerber is unable to compete effectively because of its high labor costs and a business system that depends on volume sales to make money, the company said.
Reduced environmental concerns about disposable diapers also significantly cut retail demand for cloth diapers.
Gerber’s common stock was trading Monday afternoon at $76.375, down 67.5 cents.
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