Simplot Australia announces two plants at risk of closure
Simplot Australia Pty Ltd has today advised employees that its Bathurst, NSW and Devonport, Tasmania food manufacturing plants are under threat of closure. This is due to unsatisfactory financial returns arising from a very competitive food industry environment and unsustainably high costs associated with manufacturing in Australia.
The plants, which have both been in the Simplot business for many years, are currently not competitive in the face of much lower cost imported product alternatives.
The high Australian dollar, whilst not causing the underlying lack of competiveness, exacerbates the issues facing the plant.
The announcement follows an intensive, six month review of Simplot's supply chain operations in the vegetable category. Simplot Australia Managing Director, Mr Terry O'Brien, said that the company's immediate imperative was to seek sustainable improvement opportunities with key stakeholders to help return the plants' financial performance to the required level.
"The frozen and canned vegetable categories have been chronic profit under-performers for years, regardless of the value of the Australian dollar," Mr O'Brien said.
Meetings are being scheduled with local, state and federal government representatives, employees, unions, suppliers and growers to discuss profit improvement opportunities.
"If insufficient opportunities are identified, we will be forced to close our Bathurst plant after the next corn season. Our Devonport plant will be required to produce a five year improvement plan with satisfactory outcomes or face the prospect of a longer term (3 to 5 year) closure." Mr O'Brien said.
Simplot Australia's parent company, the US based J.R. Simplot Company, remains steadfastly committed to the Australian food manufacturing industry. Therefore, it is seeking ways that its Australian operations can improve returns in order to survive the significant structural changes in the dynamics of the Australian market.