KEY POINTS:
The loss of 250 meat working jobs at a plant near Christchurch could mean the much-dicussed "mega-meat merger" will be back on the table.
Silver Fern Farms (formerly PPCS) today said it plans to close its sheep and lamb slaughter processing portion of its operation at
the Canterbury processing plant near Christchurch.
The proposal will "impact on a total of 225 processing and 24 administration and maintenance positions."
The plant that is closing employs as many as 450 workers at the peak of its season.
Silver Fern said there will be around 70 "redeployment opportunities" at the Canterbury lamb cutting operation and at its nearby Islington and Belfast plants.
Company chief executive Keith Cooper said the closure of the slaughter operations was the final instalment of its 'Project Rightsize' for 2008, - a programme designed to align processing capacity with supply, enhance financial performance, and re-position the business as a "true marketing organisation under the Silver Fern brand."
"It reflects the overall decline in South Island sheep and lamb numbers, which are expected to drop by an estimated 2.2 million units next year, as conversions in traditional sheep and lamb farming areas to dairy and alternate land uses translates into lower stock units."
Cooper said the Silver Fern projections were "broadly aligned" with Meat and Wool Economic Service forecasts that signalled an overall reduction in livestock over at least the next three years.
"There were also specific issues that make the slaughter processing operation at Canterbury less tenable than other processing options.
"These include the requirement for significant capital investment in effluent management systems, environmental upgrading, and limited development options compared to other key sites."
Cooper said the close proximity of the Canterbury plant to residential zoning also contributed to the decision.
The plant's 's boning room facilities would continue to operate as usual, since the company needed to retain its processing capability to meet increased demand for chilled product.
"This has not been an easy decision, nor is it a reflection on the capabilities, efficiencies or productivity of our Canterbury team. Rather we are taking hard decisions now in regard to the security of our business, ensuring we are an important part of the economic landscape well into the future."
Cooper says while no further closures are planned, all operations are subject to ongoing review based on site economics, and "productivity/efficiency outcomes".
Silver Fern has now cut the number of full operating meatworks by six, also cutting its lamb capacity by five chains. It says it has cut its debt by $150 million since February last year.
"These decisive actions, coupled to the proposed partnership with PGG Wrightson and commitment of additional capital of $220 million, should now address the concerns Alliance had with a merger last year and create the opportunity for Alliance to recommence merger discussions. This can only benefit suppliers to the two co-operatives," said Cooper.
- HERALD ONLINE