SIMPLOT Australia dropped a bombshell yesterday when it announced its Bathurst plant would be closed if it didn’t lift its game.
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The company is trying to identify what it describes as “profit improvement opportunities” in an effort to maintain the viability of the local operation.
However, if it can’t turn its present woes around, Simplot says it will have no option but to wind up production at its Bathurst plant after the next corn season.
A statement released to the media by Simplot yesterday told the sad story, with a cloud also hanging over the company’s food manufacturing plant at Devonport in Tasmania.
Employees have been told of the tough times facing the two plants and could be excused for expecting the worse.
Simplot blames unsatisfactory financial returns arising from a very competitive food industry environment and unsustainably high costs associated with manufacturing in Australia for the decision.
The company claims the plants, which have both been in the Simplot business for many years, are currently not competitive in the face of lower-priced imported product alternatives.
It says the high Australian dollar, while not causing the underlying lack of competitiveness, 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 Terry O’Brien said the company’s immediate imperative was to seek sustainable improvement opportunities with key stakeholders to help return the plant’s 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,” Mr O’Brien said. “Our Devonport plant will be required to produce a five-year improvement plan with satisfactory outcomes or face the prospect of a longer term (three to five-year) closure.”
According to the media statement, Simplot Australia’s parent company, the United States-based JR 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.
