Victorian Government Kicks Tin For SPC Ardmona, Offering $22 Million

SPC Ardmona MD Peter Kelly and Victorian Premier Denis Napthine shake on their $22 million deal. Source: Twitter @Vic_Premier

SPC Ardmona has scored $22 million from the Victorian Government as part of a $100 million investment to modernise its Shepparton processing plant.

The company had been seeking $25 million from the federal government, but was turned down by Treasurer Joe Hockey, who said the “age of entitlement” was over.

Victorian Premier Denis Napthine said the offer was “great news for jobs, great news for the Goulburn Valley”.

The funding in phased over three years and is for infrastructure investment, with a condition that the company maintains more than 500 people working there (it currently employs 700), but it will mean the closure of outlying plants under a consolidation plan. An estimated 2500 jobs in the valley are associated with SPC’s operations.

The company has also given a guarantee that it will pay back the money if the Shepparton plant closes in the next five years. Parent company Coca Cola Amatil (CCA) will invest $78 million in Australia’s last remaining major fruit and vegetable processor, which produces brands such as SPC, Ardmona, Goulburn Valley, Taylor’s, IXL and Henry Jones.

Speaking at a press conference in Canberra before the announcement, Treasurer Joe Hockey said he had not been told about the deal with the Victorian Government, but said Coca-Cola Amatil, “has got to do the heavy lifting here”.

Mr Hockey said “Abdul the kebab maker in the Parramatta Mall doesn’t ring up” and ask the government for money for plant and equipment.

SPC Ardmona Managing Director Peter Kelly thanked the Australian public for their support in recent weeks, but acknowledged that the deal with the Victorian Government will mean changes to the business plan he’d outlined previously.

“This $100 million capital investment package, while not the amount we originally planned, is significant and will be immediately put to work by our business to drive new product and packaging innovation and efficiency measures,” Mr Kelly said.

“Sales of our key SPC Ardmona products in major supermarkets soared on the back of last weekend’s phenomenal grassroots #SPCSunday social media campaign.

“While consumers are rallying behind us, retailers all over the country have been fantastic too. We have been receiving offers of new business and more in-store support – ideas like Australian made sections on shelf.”

SPC recently struck new deals with the supermarket giants, Coles and Woolworths to expand the product range available.

In the wake of last week’s Anti-Dumping Commission report that showed SPC Ardmona had been damaged by canned Italian tomatoes dumped in Australia under market price, CCA managing director Terry Davis said he welcomed news that the federal government was working on trade measures to defend Australian companies against dumping.

“As a major manufacturer in Australia it has been difficult to understand how the New Zealand Government has been able to support its packaged fruit industry for so long with strong anti-dumping measures, and we have not,” he said.

“We would also like to see more done in the areas of tariffs on processed fruit imports and a greater enforcement of standards and inspections to prevent imports which may have unsafe levels of contaminants like lead.”

Mr Davis said there would be a material write down of CCA’s investment in SPC Ardmona.

“CCA’s Board of Directors is comfortable with the returns expected for SPCA under the new investment package, but notwithstanding that, in order to right size the business, write downs will occur in the 2013 accounts.

Further details will be revealed at CCA’s full year results presentation next Tuesday.

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