Simplot Australia has advised employees that two of its plants are under threat of closure, with the food manufacturer blaming a very competitive industry and unsustainably high costs.
The plants, located in Bathurst, NSW and Devonport, Tasmania are currently not competitive because of the rise of cheaper imported products, a Simplot statement reads, and this is only exacerbated by the high Australian dollar.
The announcement follows a six month review of Simplot’s supply chain operations in the vegetable category.
Simplot Australia managing director, Terry O’Brien, said the company’s most pressing challenge is to seek sustainable improvement opportunities with key stakeholders, to help the plants’ financial performance bounce back 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 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 (three to five year) closure," he said.
John Brent, chair of Ausveg, made similar comments recently, arguing that labour, power and water costs in Australia are too high, forcing food processors offshore.
"If you want a future manufacturing industry in Queensland or Australia, these things need to be reviewed and understood," he said.
Canned fruit company, SPC, can surely empathise with Simplot, after recently asking the government to step in and help save its Goulburn Valley growers by imposing an emergency tax on imported tin fruit.
The company told growers at meetings in April that their produce would not be accepted from 1 May, with the high exchange rate and a decline in export markets causing SPC to dramatically reduce its fruit intake.
SPC said the high exchange rate and a decline in export markets forced the decision.
The costs of doing business in Australia are just too high, says Simplot Australia. Image photo credit: Flickr