Crop chemical manufacturer Nufarm plans to make its North American business more “cost-effective” by shutting its plant in Calgary and shipping the production work to Chicago.
The “rationalization” in Calgary, expected to be complete by next fall, “will allow us to increase flexibility, reduce complexity and more efficiently utilize our facilities,” Nufarm manufacturing group executive Elbert Prado said in a release Monday.
The Australian company has boosted its overall capacity in North America by investing in a “full retooling” of its Chicago Heights herbicide plant and a new “state of the art” seed treatment operation, he said.
Those upgrades, he said, will “ensure that we can respond quickly to the needs of our Canadian customers (and) proved a more efficient approach than expansion of the Calgary site.”
Brendan Deck, Nufarm’s general manager for North America, said in the same release the company still sees “significant potential growth opportunities” in the Canadian market, but is “confident that we can maintain or improve our level of service to our customers through increased capacity at our Chicago sites.”
Nufarm CEO Greg Hunt added the move will improve the company’s ability “to share innovations in formulation design and other customer solutions as we operate as a more closely integrated North American team, always ensuring that we continue to develop products in Canada for Canadian farmers.”
But the move, to be carried out by June 2016, will also ultimately affect about 18 full-time staff and 30 seasonal jobs in Calgary, with related “one-off” restructuring costs of A$9.5 million (C$9.16 million) as the production work transfers from Calgary to Chicago Heights over the next nine months.
Beyond this fiscal year, the shutdown is expected to generate about A$3.3 million per year in EBIT (earnings before interest and taxes) improvement ongoing, the company said.
The resulting savings, Hunt said, “are part of the performance improvement program (Nufarm) announced in February, in which we committed to delivering a net EBIT benefit of $116 million by fiscal year 2018.”
The program also spells closure for two plants in Australia and one each in New Zealand and the Netherlands, plus a “reorganization of (the) manufacturing workforce” at the plant near the company’s Melbourne-area head office.
Nufarm has operated the 53-year-old Calgary facility since 1997, when its then-parent, New Zealand-based Fernz Corp., bought French chemical firm Rhone-Poulenc’s North American phenoxy herbicide business, which included products such as 2,4-D and MCPB.
The deal with Rhone-Poulenc — whose other ag chem operations merged into Aventis in 1999, then into Bayer CropScience in 2002 — saw Nufarm pick up the formulation plant on First Street in Calgary and a plant at St. Joseph, Missouri, north of Kansas City.
On its website, Nufarm has said the Calgary site “provides us with the unique opportunity to develop products for Canadian farmers and get them to market quickly,” noting recent upgrades allowing the plant to package crop chemicals in totes and water-soluble bags as well as by the bottle or carton.
Operating as Nufarm Agriculture in Canada since 1998, the company built up its Canadian market presence through sales of generic off-patent herbicides while also buying rights to older “name” brands such as Assert, Achieve and Curtail M. — AGCanada.com Network