KEY FACTS:

-Alliance Group has proposed closing its Smithfield meat processing plant in Timaru, in South Canterbury.

-The plant, one of two in the town of 50,000, employs about 600 people.

-Alliance, a 100% owned farmer co-operative, has blamed land-use change for the likely closure.

Alliance Group has proposed to close its Smithfield plant in Timaru, which employs about 600 people, no later than the end of this year.

Civic leaders expect the move to have a major impact in the town’s social and economic health.

The Alliance co-op blamed land-use change for the move, which it said would cause a “significant number” of redundancies.

If the proposal is confirmed, sheep meat, calves and night shift venison processing would cease at the South Canterbury plant.

Alliance would continue venison processing at the plant until no later than December 31, by which time the company expected to have alternative arrangements in place for deer.

Alliance Group proposes to close its Smithfield freezing works in Timaru.

The company said about 600 staff were affected by the proposal for the Smithfield plant, which Alliance has owned since 1989.

Timaru District Mayor Nigel Bowen said the full closure of the plant would hit the town’s economy hard.

“This is massive. This is a town that has been built on these two freezing works,” he said.

Timaru’s other plant - Pareora - is run by Dunedin’s Silver Fern Farms.

Nigel Davenport, chief executive of Venture Timaru, said the closure would have a cascade effect on the town of 50,000.

“You can talk about the economic impact but it is equally there is the social impact,” he said.

“We are very lucky that we have a very strong, diverse, economy, but this will be a big hit.”

Meatworkers Union national secretary Daryl Carran said a decision on the works’ future would be made in two weeks’ time.

“But inevitably, I think we know with the declining stock numbers, that was the main reason for today’s announcement.

“And there’s just not enough stock to supply sites that are still operating and I don’t think this will be the last one.”

Alliance said if the proposal was confirmed after a consultation process, impacted staff would wherever possible be offered the chance to apply for re-deployment at the company’s other processing plants.

“However, it is anticipated there would be a significant number of redundancies,” it said.

One worker at the plant said lamb slaughtering finished at Smithfield on Wednesday.

She said the news was “the worst”.

“You know, a lot of us have just bought our houses this year.

“A lot of us have got young families, a lot of us have got families that work there.

“It’s like it’s just gut-wrenching, heartbreaking.”

Workers leave a meeting in Timaru where it was confirmed jobs are to be cut at the Alliance Smithfield meatworks plant. Photo / Ben Tomsett

Alliance chief executive Willie Wiese said the proposed closure was due to a decline in sheep processing numbers due to land-use change, which has resulted in surplus capacity in the company’s plant network.

“This proposal aims to align our operations with current livestock availability, ensuring we have the right scale and cost structure to meet future demands as a leading red meat processor.

“By optimising our capacity to match livestock flows, we can position ourselves for long-term success and reduce our cost base. We simply cannot maintain excess processing capacity when livestock numbers don’t support it.”

The 139-year-old Smithfield plant is the company’s oldest site and requires major investment in repairs and maintenance to keep it operational. It is also facing encroachment from retail development.

“We know our people at Smithfield, their colleagues and the local community will be devastated by this proposal,” Wiese said.

“Smithfield has a long and proud history, having been part of Alliance’s network for more than 30 years.”

Alliance said it started consultation with staff about the proposal this month because it marked the end of the season for sheep meat processing at the plant.

“We want to provide our people with some certainty about their employment options prior to sheep meat processing season typically restarting at the plant in December.”

Alliance reported a loss before tax of $97.9 million for the year ending September 2023.

This loss was largely due to weakening global markets, changing land use and lower livestock volumes, and inflationary pressures.

The company announced a capital raise from its farmer owners in April of this year.

“Despite everyone’s best efforts, these challenging conditions have persisted into 2024, and as we look towards the 2025 season and beyond, forecasted sheep numbers are expected to continue to decline, and deer numbers will remain static,” Wiese said.

“Therefore, we need to review our South Island processing footprint, and more specifically, our sheep and deer processing capacity.”

He believed Alliance could process sheep, deer, and cattle at its four other South Island plants during peak season, without the need for a fifth plant.

Wiese said Alliance would not make a decision on the plant’s future until the end of the consultation.

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.

Ben Tomsett is a Multimedia Journalist for the New Zealand Herald, based in Dunedin.