Simplot Australia has announced its Australian vegetable operations at Bathurst, NSW and Devonport, Tasmania will continue to operate for now, but there will be changes.
Its Bathurst plant will be downsized and production pared back to produce only frozen and canned corn and Chiko rolls, resulting in the loss of around 110 permanent positions.
The Devonport plant has three years to find its feet. After three years, Simplot said it would will either confirm the Devonport plant’s viability or begin the process of closing it down over the following two years.
“We expect that over a three year period the capital programs, together with improved management of our seasonal needs, will result in a gradual reduction of casual labour," Simplot said.
According to Simplot Australia managing director, Terry O’Brien, Simplot’s parent company, US-based JR Simplot, has committed significant financial investment but it has done so only if the operations can be shown to be viable into the future.
"In the absence of a lower cost structure, neither plant has a strong business case long-term," he said.
In June this year, Simplot announced the potential closure of both plants due to unsatisfactory financial performance and challenged stakeholders from industry and the government to help it find ways to reduce the cost of doing business at the plants.
“The outcome of that challenge has been very disappointing. Therefore, Simplot has been forced to make a commercial decision now about the future of the plants,” the company said.
“A number of long standing suppliers to Simplot, along with the NSW Government and the Bathurst Local Council, were the standout exceptions to the lack of offer of financial support.”
“Tasmanian growers also joined the push for a viable solution and remain ready to do whatever it takes to prolong the existence of the Devonport plant. The Tasmanian Government has recently indicated a grant will be made available to assist in the capital expenditure program in Devonport.”
O’Brien also said long term supply contracts from both Coles and Woolworths were welcomed and very much appreciated, but both retailers still require products to be supplied at sustainably competitive prices.
Simplot said the downsizing of its Bathurst plant would occur gradually as it migrated volumes to other facilities.
O’Brien said if Bathurst remains financially sound on this basis, it will continue until further notice. However, if costs escalated or other aspects did not prove financially viable, a total closure would then be necessary.
He also said to remain operational past the three years mark, the Devonport plant would require considerable capital investment and labour cost reduction.
“The looming trade waste upgrade at Devonport is of major concern and whilst TasWater has agreed to work with us to find a solution, it still represents a potential closure factor," O’Brien said.
