Simplot and McCain both announce cut backs, threat of closures
Two prominent Australian food manufacturers have announced they are feeling the pressure from a “very competitive food industry environment” and may forced to make closures and reduce grower contracts.
Simplot Australia Pty Ltd has announced that two of its vegetable processing plants are at risk of closure, while McCain Foods Australia has confirmed that four potato growers in Ballarat have been notified they will not be offered contracts for the upcoming harvest period in late October – November 2013.
Simplot plants at risk of closure
Simplot Australia today advised employees at its plants in Bathurst (New South Wales) and Devonport (Tasmania) are under threat of closure. The Company said this was due to “unsatisfactory financial returns arising from a very competitive food industry environment and unsustainably high costs associated with manufacturing in Australia”.
The Company said the plants, which have both in the Simplot business for many years, are currently not competitive in the face of much lower cost imported product alternatives. According to Simplot, the high Australian dollar, while not causing the underlying lack of competitiveness, exacerbates the issues facing the plants.
“The frozen and canned vegetable categories have been chronic profit under-performers for years, regardless of the value of the Australian dollar,” said Terry O’Brien, Simplot Australia Managing Director. He said that the Company’s immediate imperative was to seek “sustainable improvement opportunites” with key stakeholders to help return the plants’ financial performance to the required level.
Simplot 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.
Australian vegetable and potato growers’ representative body AusVeg has said it is “deeply troubled” by Simplot’s announcement, and has called for the Australian Government to re-evaluate the food processing sector.
Simplot Australia said its parent company, the US-based JR Simplot Company, “remains steadfastly committed to the Australian food manufacturing industry” and is seeking ways for its Australian operations to improve returns in the face of “significant structural changes in the dynamics of the Australian market”.
The announcement follows an intensive six-month review of Simplot’s supply chain operations in the vegetable category.
McCain cuts growers
Meanwhile, McCain Foods has announced that four potato growers in Ballarat will not be offered contracts for the upcoming harvest period in late October – November 2013 because of surplus potatoes from 2012 and lower customer demand for the local product.
“The company has a long-standing history with many growers in Ballarat, Tasmania and South Australia, and we are committed to maintaining those relationships where we can,” said Mr Farnell. “It’s important we give as much notice as we can for this year so growers can look for other opportunities. We believe six months before planting is sufficient notice in the circumstances,” he said.
McCain Foods said it has been in discussions with growers across Australia for the past three months over the tonnage available and individual requirements.
“Australian potato prices were still very high compared to cheaper processed imports, and it’s important for grower committees across Australia to take leadership roles in tackling reforms to reduce inefficiencies in the system, which is vital in making our industry sustainable and competitive,” said Gerry Farnell, McCain Foods Integrated Supply Chain Director for APMEA.
McCain Foods said it had discussed the threat of imports with grower representatives and Victorian and Tasmanian State Government officials over the last 18 months through a working party to tackle reforms. McCain Foods said it would continue to consult with grower communities in each State on improving industry efficiencies and the development of new technologies to make the industry sustainable.
“Only a decade ago, Australia’s potato growers were competitive and import-resistant, and this should be the number one priority for growers,” Mr Farnell said.
This will not only affect the workers an families of the factories but also the truckies an the farmers then the town it’s self if the factories were to close , well done Hilliard government for ruining another major Australian plant
ITS all going overseas. Companies are in it for massive profit , not for the good of Australia. These companies do not understand respect or loyalty to the country that makes them money. Shame on these companies for ditching Aussies for the sake of a few extra dollers.
This is all about GREED !!! It is well known that mccain make 70million in profit each yr to the detriment of farmers, workers and suppliers to sustain the greedy fat cats at the top. This is another example of the rich crying poor. Mccain systematically buy out their competitors just to close them down later under the guise of a slow economy, they have just taken over sara lee, wonder how long theyll take to screw that company up?. The govt make it too easy for rich overseas companies to annihilate local industries. This is an extremely unethical company lead by prick ziccone, a ruthless cut-throat ceo who cares nothing about the industry or the employees and unfortunately employs his incompetent mates like Gerry Farnell to carry out his dirty work . Ballarat employees are being made redundant left, right and centre due to the bullies running rampant there. Let these arseholes close down so that an australian company can take up the slack and for profits to stay in australia. If you are an aussie, write to mcdonalds, kfc, hungry jacks and insist they use an ethical Australian company to supply chips.