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Saputo to close North American dairies in latest efficiency drive

By Mark Astley+

27-Mar-2014

Saputo to close North American dairies in latest efficiency drive

Canadian dairy giant Saputo plans to close four North American plants under its latest raft of measures “aimed at improving its operational efficiency” in Canada and the US.

Quebec-based Saputo announced plans yesterday to close four manufacturing sites - two in Canada, two in the US - between May 2014 and December 2015. Around 180 employees will be impacted as production is gradually shifted to other Saputo facilities, the company said.

In Canada, the company's condensed and evaporated milk plant in Wetaskiwin and its powdered milk processing facility in Glenwood will close.

While in the US, Saputo's Swiss cheese plant in New London, Wisconsin and its mozzarella facility in Hancock, Maryland are also facing the chop.

“Over the recent years, Saputo has maintained efforts to pursue additional efficiencies and decrease costs while strengthening its market presence," said Saputo in a statement.

"The announced measures are part of the Company’s continual analysis of its overall activities."

In line with the closures, Saputo plans to invest around CAD$35m (US$31.5m, €23m) in “new fixed assets” at other Saputo facilities. It added that it will “avoid the same amount in capital expenditures that would have been necessary to upgrade impacted facilities.”

Costs related to the closures will be approximately CAD$19.8m (US$17.8m, €13m) after tax, it added.

US efficiencies "a priority"

Saputo, Canada's largest dairy processor and the third largest cheese manufacturer in the US, also boasts operations in Argentina and now Australia through its recent acquisition of Warrnambool Cheese and Butter (WCB).

Yesterday's announced North American plant closures are the latest in a growing line of efforts by the company to improve efficiency across the business.

In February 2013, Saputo announced that it was pulling out of Europe after just seven years, citing a lack of “short to mid-term opportunities” to ensure profitability.

The following month, it revealed plans to close a cheese manufacturing plant in Quebec, Canada.

In November 2013, the company stated confirmed that these efforts would continue into 2014.

"Our goal remains to continue to improve overall efficiencies and pursue growth internally and through acquisition," the company said in recent financial results.

“Improved efficiencies in both manufacturing and distribution facilities across the US remain a priority in fiscal year 2014.”

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