SPC Ardmona restructures as drought effects bite

30 January 2008

SPC Ardmona has announced a reduction of approximately 50 positions from its permanent workforce, citing the combined effects of the drought, increasing volumes of imported processed fruit and vegetable products, and the need to maintain its long-term competitive market position.
Nigel Garrard, the Managing Director of SPC Ardmona, announced the restructure across all areas of the business, resulting in both redundancies and a number of vacant positions not being replaced.
“We regret having to take this step,” Mr Garrard said. “We have been dealing with the effects of this drought and the competition from imported products for some time, and have managed to keep the business profitable and our growth plans on track.
“However, to remain competitive, we have had to make the hard decision to take further costs out of the business and restructure our operations.
“At the same time we have expanded our operations and markets overseas, to ensure our ongoing domestic and global competitiveness. I am confident that SPC Ardmona will emerge in a much stronger position.”
Mr Garrard said that the cost of the restructuring would be covered by operational and other savings across SPC Ardmona and the broader Coca-Cola Amatil (CCA) group in 2008, and that at this stage, the target for SPC Ardmona was for modest earnings growth this coming year.
Since being acquired by CCA in 2005, SPC Ardmona has invested substantially in its Australian manufacturing operations based in the Goulburn Valley. These investments include a $15 million warehouse consolidation and over $50 million in other capital projects covering areas such as visual imaging systems for fruit inspections and significant additional capacity for its highly successful plastic “Fridge Pack” fruit products.
SPC Ardmona has maintained a strong commitment to its grower supplier base, during the drought, and has to date:

• provided them with more than $2.5million of interest-free loans to finance costs of water purchases
• purchased significant temporary water entitlements for both fruit and tomato growers
• announced $7.5 million worth of subsidies
• assisted growers in the Goulburn Valley over the past 15 years to implement efficiencies in irrigation methods, eg, drip irrigation.

Mr Garrard said that while the business had been able to absorb most of these added costs to date, this was unsustainable going forward.
Mr Garrard said the fruit and vegetable processing industry, growers and suppliers, were going through some of the toughest times on record, with crops decimated by natural disasters, not only drought, but severe frosts and in recent weeks, floods which substantially reduced tomato and peach crops.

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