Simplot Australia, a subsidiary of US based J.R. Simplot, is evaluating the closure of its vegetable processing facilities in Bathurst, New South Wales and Devonport, Tasmania, a move which will result in 325 job losses.
According to the company, the decision is being made due to unsatisfactory financial returns arising from competitive food industry environment and unsustainably high costs associated with manufacturing in Australia.
The two facilities in Bathurst and Devonport, which provide 15% of the company's revenues, are currently not competitive in the face of lower cost imports, the company said.
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 that the company's immediate action 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," O'Brien added.
Simplot stated that meetings are being scheduled with local, state and federal government representatives, employees, unions, suppliers and growers to discuss profit improvement opportunities.
If sufficient opportunities are not identified, the company will close the Bathurst plant after the next corn season, while the Devonport plant will continue to operate for five years unless it improves its financial returns or face the prospect of a longer term (3 to 5 year) closure.
Simplot had entered into the Australian market in 1995 and has annual sales of more than $5bn. The company's Australian brands include Birds Eye, Edgell, Chiko and Lean Cuisine.
