Swedish confectioner Cloetta has started to streamline its operations following its merger with Leaf International, resulting in the closure of five facilities and 345 jobs being cut.
The Sweden-based confectioners completed their merger last month, creating a company generating annual sales of SEK5.7bn (US$843.5m). However, in a statement today (8 March), Cloetta said the merger has resulted in “an over-capacity in the group’s production structure”.
“The merger between Cloetta and Leaf allows an even more cost efficient production and distribution structure,” said Cloetta president and CEO Bengt Baron. “In addition, we have overcapacity in our production which makes it necessary to reduce the number of factories.”
The company said it will close its Aura plant in Finland, and its Gävle and Alingsås facilities in Sweden, moving the majority of production sites in the Swedish town of Ljungsbro and further afield in Levice in Slovakia.
The facilities in Aura and Alingsås are expected to close in early 2013 and in Gävle early 2014.
In addition, Cloetta’s warehouses in Malmö, Sweden and Slagelse, Denmark are planned to be outsourced and consolidated into a new warehouse in southern Sweden.
As a result, around 345 jobs will be cut – around 150 in Gävle, 140 in Aura, 30 in Alingsås, and 25 from the firm’s warehouse operations.
Cloetta said it expects the restructuring to cost around SEK320m (US$47.5m) to SEK370m, but generate annual savings of around SEK100m on EBITDA-level.
“It is always sad to propose the closure of factories,” said Baron. “However, fierce competition require us to continue producing products with high quality at a low cost.”
Cloetta said it will consult on its plans with local unions.