Simplot to scale back Bathurst plant, cut 110 jobs

Simplot will downsize operations at its Bathurst vegetable processing plant, but will retain its Devonport plant in Tasmania - as long as it remains viable. The company says a significantly lower ongoing cost base is needed to ensure the plants remain operational into the future.

Earlier this year, the company announced the potential closure of both plants due to their unsatisfactory financial performance and challenged all related stakeholders to collaborate to find ways to reduce the cost of doing business at the plants within a reasonable period of time. Despite the challenge, Simplot has been disappointed with the outcome and has been forced to make a commercial decision about the plants’ future.

The NSW Government and Bathurst Local Council have both offered the company financial support, while Tasmanian growers also joined the push for a viable solution for the Devonport plant. The Tasmanian Government says a grant will be made available to assist in the capital expenditure program in Devonport.

Simplot has also recently signed long-term contracts with Coles and Woolworths. “These offers are welcomed and very much appreciated, but both retailers still require products to be supplied at sustainably competitive prices,” said Terry O’Brien, Simplot Australia managing director.

“Simplot Australia’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.”

Under the downsizing measures, the Bathurst plant will produce only frozen and tinned corn and Chiko Rolls. Simplot says the transition will occur gradually as it migrates volumes to other facilities. Approximately 110 jobs will be cut.

If the Bathurst plant remains financially sound under this new structure, it will operate until further notice, O’Brien says. “However, if costs escalate or other aspects do not prove financially viable, a total closure would then be necessary,” said O’Brien.

“For Devonport to remain operational past the three-year mark, it requires considerable capital investment and labour cost reduction. 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.

“In the absence of sufficient support from other stakeholders, capital investment will be prioritised to projects with accelerated returns and we will focus on supporting cost-saving initiatives only. Our upcoming enterprise agreement negotiations with the AMWU and other unions will be critical to the establishment of a constrained cost base in the future.

“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.”

After three years, Simplot will either confirm the Devonport plant’s viability or begin the process of closing it down over the following two years.