HKScan plans to build a new poultry production plant in western Finland and shut its existing facility in Eura, a town on that part of the country.
The Finland-based meat processor, which had previously indicated it was considering investing in upgrading the Eura site, said the location of the new 25,000 square metre facility has not yet been determined. It is in discussions with the authorities in Eura, further south in Forssa, in Rauma on Finland's west coast and Säkylä, in the south west of the country.
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Production will continue uninterrupted at the existing Eura site until the new facility is completed. HKScan added that it hopes the new plant will come online by the end of 2017.
The group expects to invest EUR80m (US$86.9m) in the project and will register one-time non-cash write-off of assets of around EUR11m when it closes the existing plant.
The company did not provide details of what job losses are expected but did confirm that the change will impact the current personnel at the Eura facility. "As part of the planned changes, HKScan Finland will initiate statutory negotiations with the production personnel of the Eura plant. The negotiations will begin on 10 August 2015. Possible impacts on personnel will be determined in the course of the negotiations," the company said.
CEO Hannu Kottonen told just-food the site employs 500 to 600 staff, depending on seasonal production. He declined to reveal what proportion of the workforce was permanent and how many employees were temporary or agency employees.
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By GlobalDataThe decision to close the facility was largely a result of its age and layout, Kottonen said. "The first part of the factory dates from 1968… there have been various additions and extensions. The layout is not optimal," he explained. "We will move to a far better layout, better technology and from a single line to a more process-driven model… The improvement in productivity will be big when the new set up is up and running."
Kottonen said the scope of the operations would remain primarily focused on the current activities of slaughtering and de-boning. However, HKScan also stressed the opportunity to develop added value products at the site. "We will develop what we do – we have plans for that," Kottonen said.
HKScan has also abandoned plans to expand its production plant in Rakvere, Estonia. The company had said it would invest EUR20m to add a 10,000 square metre production facility alongside its existing plant. However, following a feasibility study, HKScan said that it will instead focus on improving operational efficiency and increasing the capacity of its existing units.
