Sweetheart Cup grows with new site, partner

Distribution center in Hampstead, venture with EarthShell seen

August 13, 1999|By Kristine Henry | Kristine Henry,SUN STAFF

Sweetheart Cup Co. Inc. officials said yesterday that it would build a $20 million distribution center near Hampstead and announced plans for a joint venture with Baltimore-based EarthShell Corp. to manufacture environmentally friendly disposable food packaging.

The company, one of the country's largest manufacturers of disposable plastic and paper products with $844 million in sales last year, has submitted a proposal to the Carroll County Department of Planning for a mid-Atlantic distribution center that would be just over 1 million square feet and sit on 141 acres on Houcksville Road near Route 30.

Tom Uleau, Sweetheart's president and chief operating officer, said yesterday that construction is expected to begin next month and the center should be running by late spring or early summer. It will employ about 50 people, the majority of which will be transfers from the company's Owings Mills site, Uleau said.

"Our existing facilities were too small," he said. "This is an efficiency improvement for us."

The Owings Mills site will continue to operate as company headquarters and as a major manufacturing facility. Uleau said privately held Sweetheart, which employs 6,000 people nationwide, including 2,500 in Maryland, had considered other in-state locations but that the Hampstead area was ideal. Uleau said the company may get some funding incentives from the county but that details had not been finalized. The site, formerly owned by Black & Decker Corp., will be developed by Cappelli Enterprises Inc. of New York, with Sweetheart signing a 20-year lease. One of the reasons Sweetheart needed a new distribution facility was that its growing work with EarthShell was taking up more and more space.

The companies already have one joint venture to manufacture Big Mac containers for McDonald's Corp. -- a project that took longer and cost more than expected. Sweetheart is now supplying a limited quantity of containers to the fast-food giant and is expected to eventually make 600 million Big Mac containers per year.

The new joint venture, the terms and value of which were not disclosed, will expand the product line and seek to attract other clients.

"We are beginning to work on the next phase of our relationship beyond Big Macs and look at other products used by other customers as well as McDonald's -- convenience stores, quick-service restaurants, transportation, health care, stadiums, convention centers -- any place you find food-service disposable food packaging being used," said Vincent J. Truant, senior vice president of EarthShell. "As far as a specific business plan, we will target market segments and which customers we want to go to, but we are not ready to define that at this point."

EarthShell was founded in 1991 and had its initial public offering in March 1998, which raised about $277 million before fees. The company has yet to earn any revenue -- although Truant expects to do so within six months -- and reported a net loss of $26.6 million in 1998.

EarthShell's products are made from potato starch, calcium carbonate and limestone. The material is biodegradable, recyclable through composting and it disintegrates in water once the coating is cracked.

"The McDonald's project has taken longer than expected and has required more capital expenditures than originally planned," said Dennis Mehiel, chairman of Sweetheart's board. "However, based on what we have seen recently, we believe that this next generation of manufacturing processes will be quicker, more efficient and have greater product flexibility."

Shares of EarthShell closed at $6.50 yesterday, up $1.25 but considerably lower than its 52-week high of $17.375 reached in January.

Pub Date: 8/13/99

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