The Simplot vegetable processing facilities at Bathurst, NSW, and Devonport, Tasmania, will both remain open for at least three years.
However, the Bathurst plant will have the amount of vegetables it processes slashed by 50 per cent after this growing season.
The Bathurst plant will also see 110 of its 170 jobs cut in an effort to restrict operations to normal working hours.
Growing quotas in NSW will not change, and corn not processed in Bathurst will be transported to Devonport.
Devonport will increase the amount it processes each year by 25 per cent. However, after capital investment in automation, the number of casual workers cut will be about 200.
Managing director Terry O’Brien says the high cost of labour has been a big contributor to the decision to downsize Bathurst and upgrade Devonport.
The sustainability of the plant rests heavily on ongoing contracts with the major supermarkets who have signed new or extended contracts with the company in recent months.
Simplot will also invest $7 million in a new freezer for the Bathurst plant, and $52 million in upgrading the Devonport plant.
Federal Government says it ‘needed more time’
The Federal Government today expressed disappointment at not being given more time to assess the situation.
Minister for Industry Ian Macfarlane says he needed more time.
“I am disappointed that the Coalition government wasn’t given time to work this issue through,” he said.
“I realise in the end though it’s a decision Simplot wanted to make sooner rather than later.
“They’ve decided that despite that offer – which I though was quite generous on my behalf, that they need to make a decision now,” he said.
“As I say, I’m very disappointed with that.”
But Shadow Minister for Industry Kim Carr says that is a nonsense.
“For the government to claim that they haven’t had time to consider these issues is complete nonsense,” he said.
“What we are seeing with Simplot, and with SPC is that this government has been sitting on its hands, and iconic Australian brands are going to face serious damage as a consequence of the inaction of this government.”
Future rests in consumers’ hands
While the next three years hold some certainty for permanent workers and growers, the long term sustainability of the factories is still under close scrutiny.
And that three year period is pinned on a contract to supply Woolworths Select brand with exclusively Australian grown produce.
Managing Director Terry O’Brien says both Woolworths and Coles are prepared to pay more for produce grown in Australia, and absorb the cost.
“They’re doing that to test the resolve of Australian consumers’ resolve of supporting Australian food manufacturing,” he said.
AusVeg Deputy CEO says consumers want to see more Australian produce on the shelf, the problem is finding it.
“We found that 80 per cent of Australians want to buy Australian product,” he said.
“We found that 69 per cent were willing to pay more to buy Australian product.
“The one thing that holds them back from buying Australian product, is that it’s difficult to identify.”
A problem that looks set to be resolved through changes to the labelling of supermarket home brand vegetables that are sourced within Australia.
Five months of stakeholder negotiations
In June, Mr O’Brien revealed that the two processing facilities risked permanent closure if productivity and profitability didn’t improve.
The Devonport plant is the last Australian vegetable processing facility, employing about 300 people and paying farmers $20 million per year for produce.
The Bathurst facility processes corn and employs around 100 people.
The company has been in negotiations with various stakeholders and the Federal Government for the last five months.
In the lead-up to the election, federal Labor offered an $18 million co-investment to Simplot to help improve efficiencies at the Devonport and Bathurst plants
The Coalition said it would not be drawn into a pre-election auction, and has since said that it will not offer financial assistance to the company.
Instead, it pledged to cut red and green tape and reduce the cost of doing business.
The Bathurst Regional Council has committed almost $300,000 in infrastructure funding to the struggling food manufacturer.
The council says if the facility continues to operate it will provide $170,000 this financial year and $50,000 each year for the next two years.
The promised money was to be spent upgrading major capital water works, saving Simplot hundreds of thousands of dollars in bills.
The Tasmanian Labor Government has not committed any funding to the company, or enacted any major structural reforms since Simplot announced some of its plants were facing closure back in June.
The Australian Manufacturing Workers Union has also been involved in negotiations in the lead-up to this announcement.
Tasmanian secretary John Short said there would be no negotiations on pay or conditions outside the Enterprise Bargaining Agreement.
That agreement is not due until January 2014.
Vegetable growers in Tasmania worked closely with the company to establish a five-point plan for improving productivity and profitability.
In the lead-up to the election, federal Labor pledged $10 million to growers to implement the plan, which included increasing research and development.
The new Federal Government has not committed any funding to Simplot growers to date.