Kerry Foods has been forced to consider closure of its meats and home baking factory in Durham, amid bullish competition in the cooked meats sector from larger UK players.
The Ireland-headquartered food and dairy firm has been operating in Durham since 1998, with production dedicated to cooked meats, meat snacking and home backing, forming part of its consumer goods business arm.
Frank Hayes, director of corporate affairs at Kerry Group, said that significant adjustments had been made to the Durham business to offset difficult market conditions and strong competition, but that to date, the firm has been unable to “restore the site to a profitable level.”
Kerry Foods has therefore been forced to consider closure, Hayes told FoodNavigator.com, and a 90-day consultation period to review the future of the Durham site has commenced.
“If an alternative strategy cannot be secured, we will regrettably have to close the site… if so, this would happen by the end of July,” Hayes said.
Not as meaty as the rest
In its 2011 annual results released in February, its consumer products business was visibly weaker than its flavour and ingredients arm, with just a 3.2% like-for-like (LFL) growth, compared to the latter at 7.7% LFL.
“Regrettably, market conditions in the cooked meats sector have been highly competitive in the UK over the past 12 – 18 months and Kerry is relatively small in this sector,” Hayes said.
“There has been an increasing level of promotion in this sector that has led to a lower factory throughput in Durham,” he added.
The Durham site employs around 350 staff that will be left jobless should the site cease production and the Union of Shop, Distributive and Allied Workers (USDAW) said staff had been left "stunned" by the "absolutely disastrous news".
But Hayes commented that efforts will be placed on re-employment for this “loyal workforce” elsewhere in the UK, particularly in the North East.
Should the site close, he said, business will be shifted to alternative Kerry sites that “all have the capacity to take on production from Durham.”
The home baking segment will be shifted to Spalding, Lincolnshire, and the meat snacks to Attleborough, Norfolk, Hayes detailed. The cooked meats part of the Durham business would be moved to Kerry’s major meat plant in Wicklow, Ireland.
The Durham site would then be considered for other Kerry projects.