20 Mar McCain Foods SA to shut George factory
McCain Foods (SA) in George is expected to close by September this year, bringing more business decline and job losses to a region already hard hit by the recession. The landmark vegetable processing factory (left) has been in operation for the last 48 years.
The ripple effect will be felt. The factory procured about 15 000 tons of raw product for the year up to 30 June 2013.
The closure will directly affect 41 permanent and 100 seasonal McCain employees, between 40 and 45 farmers and their workers, and suppliers such as transport companies.
The economy of George will take a knock at a time that business is already struggling to keep afloat.
Farmers have been expecting the move for some time, but the reality of the announcement is hitting home hard and has been met with shock, reports the George Herald newspaper. They have already been informed that no contracts for winter crops will be forthcoming.
Employees were informed of the proposed closure officially on Monday, following an investigation into the future commercial viability of the plant
McCain Foods (SA) MD, Louis Wolthers, says the closure is being considered because of considerable pressures on McCain as a result of stagnant market conditions and the significant increase in low-priced imports from Western Europe and China. The imported products of lower quality have proven more attractive to consumers in the difficult economic conditions of the last five years.
The company operates two vegetable processing plants in South Africa – the one in George and in Springs – and both are operating below capacity.
“The ongoing operation of the underutilised George factory contributes significantly to the company’s inability to remain competitive in terms of pricing relative to imported products,” says Wolthers.
“Various measures have been taken to reduce overhead costs, including the downsizing of the George plant in 2005, which regrettably failed to achieve the desired results.”
He says the investigation into the commercial viability earlier this year indicated that the majority of crops which are being processed at the George plant could also be procured in the northern provinces and therefore processed at the Springs plant at competitive costs.
“The George plant is geographically poorly situated in terms of access from both growing areas and to local retail markets, which results in high transport costs. It makes commercial sense to merge the two plants, which would result in the Springs plant operating closer to capacity and would reduce the overhead costs of the total vegetable processing operations significantly. This will ensure that we are able to supply frozen vegetable products at competitive prices to the marketplace, thereby protecting and even growing our market share and ensuring the company’s survival under tough economic and trading conditions,” he comments.
McCains SA is proposing to close the plant towards the end of September or October once the carrot crop has been processed.
Wolthers does reportedly point out, though, that the closure of the plant is still in the proposal stage. “McCain Foods remains open to viable proposals to keep the plant open. There is a lengthy period between the issuing of the notice to staff and the proposed closure period, which will allow sufficient time for stakeholders and affected parties to meet and consult with management, whereafter a final decision will be taken.
“We sincerely regret the impact this proposed closure would have on employees at the George plant as well as the Southern Cape agricultural/agronomy functions and we undertake to consider all submissions made by employees and their representative trade union, the Food and Allied Workers Union (FAWU) in this regard.”
The factory was established in 1965 as Deepfreezing and Preserving Ltd and traded as Table Top. In the early eighties, Fed Food purchased the company, but retained the Table Top brand. During this period, they also bought Harvestime. I & J took over the company in the late nineties and it changed hands again in early 2000 when McCain became the owners.
Wolthers says once it has finished final production and emptied the cold storage facilities, it would be interested in selling the property.
Source: George Herald