Simplot’s Tasmanian factory.
Simplot Australia employees at the Bathurst, NSW and Devonport, Tasmania food manufacturing plants have been told that their places of work are under threat of closure. The company is experiencing unsatisfactory financial returns arising from a very competitive food industry environment and unsustainably high costs associated with manufacturing in Australia.
The plants are not competitive with lower cost imported products. The high Australian dollar, while 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 conducted by the company. 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 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 is said to be seeking ways that its Australian operations can improve returns in order to survive the significant structural changes in the dynamics of the Australian market.