An Adelaide glass packaging factory is about to turn off one of its glass furnaces, leaving up to 60 people out of work.
The West Croydon factory – owned by US group Owens-Illinois (O-I), formerly ACI Glass – which has been making glassware at the Port Road site since 1914, will move from a two to a single furnace operation effective Monday 15 September. The new structure will mean a reduction in the workforce by up to 60 positions.
O-I Australia’s general manager, Timothy Connors said the decision to change the operating structure was not an easy one to make and not one that has been made lightly, however it was required to ensure the sustainability of the Adelaide operations now and into the future.
“The continuing decline of the Australian wine export market combined with a challenging domestic market has resulted in a decrease in demand for locally-manufactured glass bottles,” Connors said.
“For more than 100 years, our Adelaide site has proudly produced glass bottles and containers for many of Australia’s leading food and beverage brands. We are very much committed to manufacturing in Australia and this change to our structure allows us to continue to provide our customers with locally-made, quality glass for many years to come,” Connors said.
Until late 2012 the West Croydon factory operated three furnaces. Joseph Kane from the Australian Workers Union told the ABC the factory would retain about 150 workers, but these employees faced an uncertain future.
“The question has to be asked is the plant sustainable with one furnace operating. If you take a three-tank operation and turn it into a one-tank operation at a very large plant like that, how can it be sustainable going into the future? I have grave concerns for the employees who are left at the plant,” Kane said.
The ABC has reported the job cuts are expected to be spread across all areas of the business and voluntary redundancy offers are expected.
In 2012, O-I general manager Brian Slingsby, said there were a number of factors for the downsize from three-to-one furnaces. “O-I’s Adelaide plant has been impacted by an increase in bulk-wine exports which represent almost 65 per cent of the Australian wine market. Due to the high Australian dollar, winemakers are moving to bulk-shipments and in-market bottling to remain competitive in export markets,” Slingsby said.
“In addition, market conditions and consumer sentiment have continued to deteriorate. This has led to declining beverage sales across the country, particularly in the beer and wine segments.”
A July O-I investor update flagged the potential for contracting Australian operations. Albert Stroucken, O-I chief executive, recently reported improving profitability thanks to a $25 million restructure in Australia, yet shipment s across Asia-Pacific had fallen by more than five percent in the second quarter.
In late July, The Sydney Morning Herald reported that a protracted slowdown in sales of beer and wine in Australia meant O-I might have to revisit redundancies and plant closures soon. The Herald said incomplete sales contracts with large customers, presumably the brewers Foster’s, Lion Nathan and wine groups, together with union deals, were also weighing on the company.
“Given the continued sluggishness of the Australian wine and beer markets, as well as the fact that we are still negotiating major customer and union contracts, further capacity actions may be necessary,” Stroucken told the Herald.
The glass packaging manufacturer has 77 plants in 21 countries and its Asia-Pacific eight plants across four countries – Australia, China, Indonesia and New Zealand – with headquarters in Melbourne.