Closure of Findus fish plant in UK raises questions about frozen market.

Closure of Findus Fish Plant in UK Raises Questions About Frozen Market

There were not many raised eyebrows in England at the recent news of the pending shutdown of the Findus fish factory in Grimsby. The decision will end the company's production of fish fingers and other frozen coated fish in Britain. The bottom line is that even with 10% of a 160 million [pounds] market, it's hard to make money when margins get squeezed too tight.

What might be questioned is the interpretation put upon this event by the principal players. Findus blamed weaker demand for coated products, pointing out that total sales of fish fingers had fallen by 20% over the past four years, as consumers switched to other convenience foods such as pasta, pizza and Indian dishes.

Changing tastes, fiercer competition and a 50% rise in raw cod prices since 1987 had eroded profits, making the 30-year-old plant uneconomic. Findus - which like Stouffer in the USA, is a subsidiary of the Nestle Group, and the originator of Lean Cuisine - had invested 12 million [pounds] since 1986 to modernize the Grimsby factory so that it could make other types of convenience foods as well. But it has recently operated at between only 50% to 60% of capacity.

"One has to accept that this is no longer a profitable business for us," Richard Webb, general manager, told the editor of Quick Frozen Foods International during an interview at company headquarters in Croydon. He lamented lost exports to Germany: "Our client was quoted prices from a supplier in the Far East that were equal to what we were paying for raw materials and packaging."

The general manager said there has been an industry-wide trend of scaling back redundant plant operations over the past five years, as companies are challenged to remain competitive. He noted that while Findus has reduced its number of factories from three to two and trimmed the workforce from 2,280 to 2,100, Bird Eye's production facilities have been halved from eight to four, with its workforce falling from 12,665 to 6,675. And UB/Ross, based on published reports, has reduced employees from 9,300 to 6,500. Five plants were shut down in the process, leaving 13 operational.

Findus plans to consolidate production at its newer facility in Longbenton, Newcastle-on-Tyne, which was purpose-built for packing frozen pizza, pancakes and prepared dishes. There a planned 8 million [pounds] investment is expected to create 100 jobs over the next two years. Some 900 positions will be lost at the Humberside plant over the same period.