Coca-Cola Amatil to close Adelaide factory in 2019, boost Queensland production
Updated
Coca-Cola workers in Adelaide are in shock after the company announced it would close its South Australian manufacturing facilities in 2019.
Key points:
- About 150 people are employed at the Thebarton factory
- The closure is expected to deliver $20 million in cost savings
- The company is upgrading its site in Queensland
Workers attended the Thebarton factory at 8:00am for the announcement, after shifts were cancelled and casuals stood down.
About 180 people are employed at the facility, one of six of the company's bottling plants in Australia.
In a statement to the ASX, Coca-Cola Amatil said the closure of the Thebarton facility would deliver the company a further $20 million in cost savings from 2020.
That is on top of the company's attempts to save $100 million over the next three years in its Australian beverages arm.
The group's managing director, Alison Watkins, said the company had identified consolidation opportunities across its Australian supply chain.
"This is not a decision that we take lightly, however we know we must modernise and invest in new capability," she said.
The company in October last year announced it would invest $75 million in consolidating its sites in Brisbane, with a new warehouse facility at its Richlands plant.
"Additional capacity will be developed at Richlands, with a further $90 million investment to install a new glass production line and new dairy and juice production capacity," Ms Watkins said.
The company's Australian division managing director Barry O'Connell said the state's payroll tax and power prices did not play a big part in the decision to close the factory.
"I would say to a very limited extent because it is not about individual state idiosyncrasies in that manner," Mr O'Connell said.
"This is much more about our Australian footprint, it is about a strategic decision and investment over the next five to 10 years and sure it has an impact on it but it was by far down the scale when we look at the overall decision."
He said the company looked at its operating costs including freight, capacity at plants, opportunities to expand plants, as well as the technology use and age of the equipment.
The company announced underlying earnings before interest and tax (EBIT) of $683.4 million in 2016, and underlying net profit after tax (NPAT) of $417.9 million.
Premier Jay Weatherill said the State Government was open to offering Coca-Cola support to stay in South Australia, but the closure of the factory appeared unavoidable.
Mr Weatherill said an offer of land could have been discussed to keep operations in the state, but the Government had no contact with the company before the decision.
"We're pretty disappointed about that but we also note their observation that there's no level of support that the Government could have offered that would have changed their position," Mr Weatherill said.
State Employment Minister Kyam Maher revealed earlier today the Government spoke with the company about its decision last night.
"I know in the very brief conversations the Government has had with Coca-Cola, this is not about power costs," Mr Maher said.
'Who is going to employ me?'
Worker Gino Gaddi said workers were disappointed.
"The main mood is just shock," he said.
"We knew something was going on, you know you can tell, but we thought maybe a few [production] lines that were not efficient enough, but overall it's a big shock."
He said some workers had only started at the factory a month ago.
Mr Gaddi said he would think about what was next for him.
"[I'm] 58, who is going to employ me? There are youngsters around that will do a good a job as me."
He said the plant had not been running efficiently for a few years and he understood the company was protecting profits and shareholders.
Shadow employment minister Corey Wingard said Cola-Cola Amatil's decision showed major companies would rather not do business in South Australia.
"Coke is spending $90 million increasing production in Queensland and WA, but they're shutting down here in South Australia, and it really is a sign that companies are losing confidence in the Weatherill Labor Government.
"They're not investing in South Australia and as a result, jobs are leaving, and it's concerning."
Topics: unemployment, community-and-society, company-news, thebarton-5031, adelaide-5000, richlands-4077, sa
First posted
