Industry ingredients manufacturer Tate & Lyle is proposing to shut down its corn wet milling plant in Thessaloniki, Greece, by September 2008 due to anticipated losses forced by new EU sugar regulations. 

The company is proposing to shift production to other plants following the closure – which could potentially affect 88 workers at the Thessaloniki factory.

Tate & Lyle Europe CEO Clive Rutherford said: “It is with regret that we announce this proposal.  Despite the considerable progress made in recent years, it has not proved sufficient to offset the inherent cost structure of the plant, which arises from the high cost of local maize and the plant’s small scale.”

The company cites the reform of the EU Sugar Regime, which regulates the production and prices of sugar and isoglucose from July 2006, as a reason for closure as it reduces sugar production quotas and cuts the sugar reference price by 36%. Tate & Lyle said the reforms directly reduce the profitability of isoglucose and other grades of glucose produced in Thessaloniki, putting the plant into a loss making position.

Rutherford added: “These factors make the plant highly vulnerable to the consequences of the EU reform and whilst the plant may be able partially to absorb the negative impact of the reform during the early period of the new regime, possibly up to September 2008, after that time we expect that the plant would no longer be viable under the regime”.

The Tate & Lyle European Works Council, Local Works Council and employees were told about the proposal on Friday (13 January), and will be the subject of consultations over the coming weeks.