Synlait’s Pōkeno plant will stop processing raw milk and focus on producing advanced nutrition products following a review into its North Island assets.
The review found that switching between processing plant-based proteins and dairy hindered the Pōkeno plant’s operational efficiency.
In addition, it found that transportation and a number of manufacturing costs mean it is not financially viable for Synlait to keep processing milk at Pōkeno.
This prompted Synlait’s board and management to make the decision to cease processing milk at the factory.
Synlait CEO Grant Watson said the company will meet all of its contractual obligations to the company’s 54 suppliers including incentive payments.
“We are proud of our cohort of North Island farmers and very much value the working relationship we have with them. They will remain Synlait suppliers until the end of their supply agreements and we will remain their first port of call for support.
“What will change is that Open Country will be collecting and processing their milk.”
Synlait’s Dunsandel facility will remain the hub of the business for dairy operations.
The review was undertaken as part of Synlait’s business recovery plan and examined its manufacturing facility in Pōkeno and its blending and canning facility in Auckland.
It explored a wide range of factors, including potential ownership structures, mothballing the Pōkeno facility, and how to balance its capability to process dairy and non-dairy hybrid nutrition products.
Synlait CEO Grant Watson said the review has been detailed and thorough.
“It’s given us the insight needed to lift the financial performance of these world-class assets. We now have a pathway to profitability in our North Island operations.”
Synlait’s board will not actively seek a buyer for Pōkeno, however in the event a compelling offer is made for the asset, the company may consider it.
