2 Sisters Food Group has announced plans to close its Llangefni processing plant on Anglesey, putting up to 730 jobs at risk.
The poultry giant acquired the north Wales site in 2013 from former owners Vion. It specialised in the production of large whole birds, to B2B, rather than retail customers, and is one of the smallest factories in its manufacturing estate.
2 Sisters said it had invested more than £5m in the factory including new plant and machinery, refurbishments and employee benefits since 2013. But after the completion of a recent internal review of its UK poultry division, it today announced the plant was “regrettably not sustainable”, amid soaring operating costs.
In a statement, the supplier said it needed to “make operational changes to help us overcome the continuing challenges facing the food manufacturing sector”.
One of the major challenges facing the business is known to be the prohibitive cost of energy – with the poultry sector overlooked for inclusion in the government’s new Energy and Trade Intensive Industries (ETII) scheme, which it announced earlier this month.
The Grocer understands poultry’s omission from the scheme was among the key inflationary factors – among many others – that informed 2 Sisters’ decision to shutter Llangefni, with the business said to be “over a barrel” on the issue and facing a 300% energy cost hike in April.
“Regrettably, the review shows our Llangefni factory is not sustainable,” the statement read.
“It is old, one of our smallest sites and lacking space to be efficient. The cost to produce here is higher, and it would require significant investment to bring it up to the standards of our other factories,” it added.
“Our products can be made more efficiently elsewhere across our estate. Therefore, our proposal is to cease operations at the factory, putting the site at risk of closure.”
The move comes as 2 Sisters posted a £95.5m loss in its most recent accounts during the year to 31 July 2021.
‘Worst to come’ from food sector’s myriad crises, says 2 Sisters boss Ronald Kers
2 Sisters CEO Ronald Kers told The Grocer in December that the business had seen a 35% increase in production costs year on year, while the wider poultry sector was facing an “existential threat to its future” in the face of soaring production costs in energy, feed and labour, combined with the UK’s worst-ever avian flu outbreak.
“Whenever you lose tens of millions of pounds in revenue, that has an influence on any business, large or small,” Kers added.
“Clearly this will be extremely disappointing news for our Llangefni colleagues, and it is no reflection of their continuing hard work and commitment,” the supplier said of its decision to close the Llangefni plant.
“However, we have a duty to remain competitive and protect our wider business, on which many thousands of people depend.”
It added its key priority now was “to hold meaningful consultations with all affected employees and their representatives and explore the full range of options before making any final decisions about the closure of the site”.
These options would include “all redeployment opportunities in the region with the help of all relevant support agencies, both inside and outside the business”, 2 Sisters’ statement concluded.
The potential closure of the factory – one of Anglesey’s biggest employers – was described as “devastating news” by the island’s MP Virginia Crosbie.
It was one of the meat and poultry sector’s most high profile victims of the Covid pandemic, with an outbreak among staff in the summer of 2020 leading to a temporary closure.
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