Alliance Group returns to profit after two years with $93m turnaround
After two years, Alliance Group has returned to profit.
Farmers are struggling with the effects of adverse weather, terrible prices for lamb and having to sell their products in an unstable global market.
For the workers at Smithfield it is a bitter blow. They are highly skilled people who have played a huge part in the local and national economy. There are also the other people who have support roles around the processing plant who will now have the unenviable task of finding work and maybe having to leave the district.
While many may see the closure of the 139-year-old Smithfield plant as a surprise, the fact is that this has been a storm coming and the fact that it’s taken so long to happen is itself a surprise. Alliance rightly points to the age of the plant and need for investment to upgrade it. Another major factor is declining stock numbers, so the economics of an upgrade don’t cut the mustard. Unfortunately, Smithfield is the area where the declining stock has had a significant impact, says Alliance.
But there are other things in play as well.
Land use change – for the worse – has seen pine trees planted on good sheep country, with the result that the national ewe flock continues to drop. That is not the fault of Alliance, rather questionable economic policies which encourage the planting thousands of hectares of land in pines. For what good reason, many ask. Carbon farming, they say.
The other factor at play with Smithfield is urban encroachment and there are rumours in Timaru that a developer is interested in the site for retail or other business options.
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Declining sheep numbers the last straw for plant closure
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Proposal announced for Alliance's Smithfield plant
There is talk that the coolstores at the site may be kept as they are believed to be in reasonable condition. Little is for certain now.
What is certain is that there could be more closures like Smithfield if stock numbers continue to decline and newer plants with greater capacity and are better designed to better meet the needs of overseas consumers take over from the older plants.
