Abbott Laboratories is investing US$500m in a new factory to make infant formula, it announced this week.

The location of the nutrition facility, which will produce “specialty and metabolic infant formulas”, is yet to be decided.

The announcement follows country-wide shortages of baby formula in the US this year sparked by the closure of an Abbott plant in Michigan. The site was closed in February following consumer complaints related to cronobacter sakazakii or salmonella illness from the consumption of baby powders made at the plant.

Chairman and CEO Robert Ford said: “We conducted an analysis of the US infant formula market and concluded that this country would benefit from more manufacturing capacity and redundancy. As such, we are moving forward with plans for a $0.5bn investment in a new US nutrition facility for specialty and metabolic infant formulas.

“We are currently in the final stages of determining the site location, and will work with regulators and other experts to ensure this facility is state-of-the-art and sets a new standard for infant formula production.”

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Abbott was one of the top three baby-milk companies in 2020 according to GlobalData research. Abbott Laboratories, Mead Johnson Nutrition (owned by Reckitt Benckiser) and Nestlé accounted for more than 90% of US sales in 2020.

Following FDA testing, Abbott said there was no salmonella found at the closed facility in Sturgis. The site was re-opened in July but the ripple effects of the closure led experts to call for more diversity in the market. In a bid to ease the shortages, the US allowed overseas companies to more easily supply into the market.

Abbott outlined its plans for the new factory alongside the company’s third-quarter financial results.

On a call with analysts to discuss the numbers, Ford provided an update on the Sturgis site. “We restarted production at Sturgis in July with a focus on our EleCare and other specialty infant formulas. And in September, we began production of several Similac products, which we expect will begin to reach retail store shelves over the coming weeks.”

He added: “We also boosted production in our global network to increase infant formula supply to the US. In fact, we delivered roughly the same volume of formula to our US customers this past quarter as we did during the three months prior to the recall.

“Our number one supply priority was to the WIC – women, infant and children – federal food assistance programme to ensure that underserved participants would have access to infant formula.”