Quebec dairy giant Saputo hopes to eventually cut about $7 million in annual costs by closing three dairy plants in Eastern Canada before the end of next year.
The Montreal company announced Tuesday it will close the former Scotsburn milk plant at Sydney, N.S. in June, the Fromagerie Madame Chevre specialty cheese plant at Princeville, Que., in August this year and the former Clark Dairy milk plant in Ottawa in December 2017.
Linked to the three closures are plans to install about $32 million in “new fixed assets” at other Saputo facilities over the next two fiscal years, the company said.
The closures are expected to cost Saputo about $23 million after taxes, including in after-tax fixed assets write-down worth about $19 million, to be booked in the company’s fourth quarter for fiscal 2016.
Annual savings after taxes are expected to begin in fiscal 2017 and to rise to about $7 million per year starting in 2019.
The plant closures will affect about 230 employees in total, some of whom will be offered the possibility of moves to other Saputo plants, the company said.
Teamsters Canada, whose Local 647 is the union for about 100 Saputo staff in Ottawa, said Tuesday the company has “justified the closure by calling the facilities outdated,” but the union noted recent “equipment improvements” were made at the site.
“The company needs to offer a much better severance package and respect the workers who help build up this company,” Teamsters spokesman Martin Cerqua said in a separate release.
“At the moment, all options are on the table. We already scheduled a meeting with the company to address our members’ concerns and hopefully work something out.”
Saputo, which has been in acquisition mode in Canada, the U.S. and Australia in recent years, said Tuesday it has also “maintained efforts to pursue additional efficiencies and decrease costs while strengthening its market presence.”
The former Clark Dairy plant in Ottawa came to Saputo in 2008 through the takeover of Weston Foods’ Neilson Dairy division, while the Sydney milk plant came through the takeover of Scotsburn Co-operative Services’ fluid milk business in 2014.
The Fromagerie Madame Chevre plant, a specialty plant for high-end surface-ripened cheeses, was built at Princeville, southeast of Trois-Rivieres, in 2005, and employs about 25 staff. It came to Saputo last fall through the takeover of Ontario goat cheese firm Woolwich Dairy. — AGCanada.com Network