Olson Paying a High Price for Change

Olson Industries’ transformation from egg producer to plastic-container manufacturer continues to be costly, both for Olson’s bottom line and for members of the company’s administrative ranks.

The latest casualty in Olson’s executive suite is Jonathan M. Berge, a 12-year veteran of the company and, until last week, its executive vice president, general counsel, treasurer and secretary.

Berge, 41, resigned Nov. 15 because the Sherman Oaks-based company no longer needs all the administrative personnel it once employed now that it has shed its eggs business to concentrate on making plastic containers.

Olson Chairman John W. Buffington said Berge’s departure had nothing to do with his skills, simply that Olson’s plastics subsidiary, Dolco Packaging, “had its own management in place. And with that being our fundamental business, you don’t need the corporate structure on top of that.”

Buffington said the firm has cut the number of administrative jobs from 60 to 35 in the past two years.

3rd Quarterly Loss

Indeed, Olson does not need unnecessary costs. Two weeks ago, it posted its third consecutive quarterly loss, with a $1.75-million deficit for the third quarter ended Sept. 30. For the first nine months of 1987, the company lost $5.5 million on sales of $46.7 million.

A big chunk of the losses, $4.6 million in all, stems from Olson’s divestiture of its egg business earlier this year. In the latest quarter, for instance, Olson took a $1-million charge to cover its maximum potential exposure to worker compensation claims filed by its former egg workers.

Buffington, however, vowed that “you won’t see anything more on the discontinued operations” showing up to hobble Olson’s financial performance.

Unfortunately, that still doesn’t guarantee Olson a profit for the fourth quarter and beyond. The company is struggling to make money in plastic containers because polystyrene, the main raw material used in its containers, has soared in price over the past year. At the same time, Olson has hesitated to raise prices for fear of losing sales.

And the company isn’t optimistic about a quick end to the problem. In its third-quarter report, Buffington said that the company’s profit margins would remain under pressure “until there is some change in the resin market or until we secure price increases for our products.”

As for Berge, he remains a consultant to Olson while deciding where to go next. Buffington said Berge will also get “a very nice severance package.”