Simplot Australia considers closure of two vegetable processing facilities

Simplot Australia, a subsidiary of US-based JR Simplot, is evaluating plans to shut down its vegetable processing facilities in Bathurst, New South Wales and Devonport, Tasmania, a move which would result in about 325 job losses.

Simplot has blamed unsatisfactory financial returns from the challenging food industry environment and unsustainably high costs associated with manufacturing in Australia for the closure plans.

The two facilities are currently not competitive in the face of lower cost imports, and the high Australian dollar has also exacerbated the issues facing the facilities, the company said.

The two facilities in Bathurst and Devonport produce frozen and canned vegetables and generate 15% of the company’s revenues.

This announcement comes after a six-month review of the company’s supply chain operations in the vegetable category.

Simplot Australia managing director Terry O’Brien said that the company is seeking sustainable improvement opportunities with key stakeholders to help return the financial performance of the two facilities 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.

The company has scheduled meetings with local, state and federal government representatives, employees, unions, suppliers and growers to discuss profit improvement opportunities.

If the company fails to identify sufficient opportunities, it plans to shut down the Bathurst plant after the next corn season, while the plant in Devonport will operate under a five-year improvement plan and face a longer term closure unless it improves financial returns.

Simplot, which entered into the Australian marketplace in 1995, has annual sales of more than $5bn, and its Australian brands include Birds Eye, Leggo’s, Edgell, Chiko, Lean Cuisine, John West and Quorn.