Simplot acts on plant closure threat

Urgent meetings scheduled to address the possible closure of Simplot's Bathurst and Devonport plants following a supply chain review

Simplot acts on plant closure threat
Simplot plants face closure

June 11, 2013

Urgent meetings have been scheduled to address the possible closure of Simplot's
Bathurst and Devonport plants
following a review of the company's supply chain.

Simplot Australia last week advised employees in NSW and Tasmania their plants may be closed, citing unsatisfactory financial returns arising from a very competitive food industry environment and unsustainably high costs associated with manufacturing in Australia.

The iconic processed food supplier says the plants, which have both been its 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," says Simplot Australia Managing Director Terry O'Brien.

The announcement follows an intensive, six month review of Simplot's supply chain operations in the vegetable category.

O'Brien says Simplot’s immediate imperative is 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," O'Brien says.

O’Brien says 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," he says.

"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."

O’Brien adds Simplot Australia's parent company, the US-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," he says.

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