Simplot will give its Devonport vegetable processing operation three years to shape up, but up to 250 casuals will lose their jobs.
The company’s Devonport and Bathurst plants have been under review since June when the company announced it needed to cut costs.
The decision has been made to retain the Devonport plant and its current range of operations but that it would have to undergo extensive capital works and be reassessed in three years.
Simplot Australia’s Managing Director Terry O’Brien says the aim is cut the Devonport casual labor force from around 200 to 250, to only 10 to 20.
The operation at Devonport employs about 160 permanent staff.
The permanent workers are safe for now, but the elimination of all but a handful of the casuals amounts to a cut of the equivalent of about 128 full time jobs.
“For Devonport to remain operational past the three years mark, it requires considerable capital investment and labour cost reduction”, he said.
“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,” Mr O’Brien said.
The company’s Tony van der El says the factory has three years to prove its viability.
“We’re moving nearly 5000 tonnes of volume from the Bathurst plant to Devonport,” he said.
“Then on top of that with the Woolworths and Coles deal and the volume, there’s another 6000 tonne, so the plant will receive somewhere between 11 and 12,000 tonne into it.
“The issue is though we’ve got to make sure that’s cost competitive and convert that and can make a good margin out of it.”
Since the middle of the year, Simplot’s signed bigger supply contracts with both the major supermarkets but it has already warned they may not be enough to keep the plants open.
The Tasmanian Government has offered $500,000 toward a $25 million upgrade at Devonport.
The Tasmanian Secretary of the Australian Manufacturing Workers Union, John Short, says increasing productivity at Simplot’s Devonport factory shouldn’t be achieved through lowering worker’s pay.
“I think what we need to emphasise though is that increased productivity isn’t code for reducing people’s take home pay,” he said.
“We want to work co-operatively with the company and we have done that on many many occasions in the past and we will do in the future.”
Mr Short says it will take some time for casual workers to find out how they will be affected.
“It is a concern. I mean we’ll do whatever we can to support those people.
“They may not be working at the moment, but as the season goes ahead, you know, maybe less of them will be getting that casual work.”
Since June, when the company announced it had to cut costs and was reviewing the two plants, all jobs at Devonport had been in doubt as managers tried to find ways to make the factory viable.
The State and Federal Governments and growers have been involved in the process.
Mr O’Brien, says it has been an anxious time for workers.
“They’ve been waiting patiently since June when we spoke to them and initially put this out on the airwaves,” he said.
Simplot said steps will be taken to pare back its Bathurst plant to produce only frozen and canned corn and Chiko rolls, and 110 permanent workers will lose their jobs.
Farmers told to increase production
Tasmanian farmers supplying to vegetable processor Simplot are being told to increase production.
The company’s Richard Hayes says about 140 suppliers will now need to increase production to meet new contracts with the supermarket giants.
But the head of the grower’s group Andrew Craigie is worried about what will happen.
“We’re very much on probation,” he said.
Mr Craigie has welcomed the decision that includes bringing 5000 more tonnes of product per year to Devonport, but remains worried.
“All our margins, there is nothing left for us to give away on those, they are at break even point now.
“For a lot of growers their costs would be more than what they’re receiving so it will be challenging for a lot of growers to actually remain in for the next three years.”
Industry group AUSVEG has welcomed the decision, despite production being scaled back at Simplot’s Bathurst plant in New South Wales.