Simplot, maker of Chiko rolls, Edgell and Birdseye, may close local plants

John Durie
June 05, 2013
The Australian

US food giant Simplot has threatened to close two Australian food processing plants, putting 325 jobs at risk in Bathurst and Devonport.

Simplot Australia said in a statement that it “advised employees that its Bathurst, New South Wales and Devonport, Tasmania, food manufacturing plants are under threat of closure. This is due to unsatisfactory financial returns arising from a very competitive food industry environment and unsustainably high costs associated with manufacturing in Australia”.

The plants are currently not competitive in the face of lower cost, imported products. The high Australian dollar, whilst not causing the underlying lack of competitiveness, has exacerbated the issue.

The announcement follows a six-month review of Simplot’s supply chain operations in the vegetable category.

Simplot, which is owned by Idaho-based food manufacturer J.R. Simplot, supplies Coles with private-label products, makes products under household brandnames including Chiko, Edgell, Birdseye, Seakist, Lean Cuisine and John West, and producing generic products such as hot chips and in-flight meals.

The company has been in Australia since 1995 and owns six manufacturing operations across the country. The Bathurst plant, which processes corn and employs 167 people, is at the most immediate risk, with staff advised today that its future would be assessed after next year’s corn crop.

Simplot Australia managing director Terry O’Brien said today that the company’s immediate imperative was to seek sustainable improvements with key stakeholders to help return the plants’ financial performance to an acceptable level.

The move follows a string of departures from the Australian food manufacturing sector in recent years, including Heinz.

Mr O’Brien added: “The frozen and canned vegetable categories have been chronic profit under-performers for years, regardless of the value of the Australian dollar.”

Meetings are being scheduled with local, state and federal government representatives, employees, unions, suppliers and growers to discuss profit improvement opportunities, the company said.

“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.

Parent company J.R. Simplot said today that it remained committed to the Australian market.