On Wednesday, December 18, the Swedish beverage manufacturer Oatly announced that, after three years of operation, its Senoko plant in Singapore would be closing.
According to a press release from the company, the action is intended to enhance its “future cost structure and reduce future capital expenditure needs.”
Oatly produced its oat milk in collaboration with Yeo’s, a food and beverage company based in Singapore. In October 2021, the S$30 million (US$22 million) production facility opened.
Oatly responded to questions from CNA by saying that the announcement on Wednesday would impact 34 employees in Singapore. According to a spokeswoman, this will happen “through a phased approach over the coming months”.
“We are committed to supporting all impacted employees and ensuring they are treated with respect and care in line with the company’s values. This includes offering outplacement assistance and training,” a spokesman stated.
CNA has reached out to Yeo’s for additional details.
According to the Food, Drinks and Allied Workers Union (FDAWU), Oatly is not a member of any unions.
According to FDAWU president Julie Cheong, the organization would use the larger labor movement network to assist impacted union members when necessary.
This includes offering career counseling and job matching services through NTUC’s Employment and Employability Institute.
Impacted members can also contact FDAWU by phone or email.
Oatly also established its first manufacturing plant in China in 2021. Compared to the Singapore facility’s 60 million litres per year, the Ma’anshan plant in Anhui province can generate over 150 million litres of oat-based products.
According to Jean-Christophe Flatin, CEO of Oatly, the company’s choice to divide its operation in greater China from its business in Asia has resulted in “significant improvements” in the latter’s state.
“We expect that the action we are announcing today will capitalise on those collective improvements and further strengthen our ability to ensure that we have the right amount of capacity, when we need it, while being efficient with our capital and costs,” he stated.
“We also expect the continued simplification of our operations to enable us to sharpen our focus on execution as we drive toward consistent, structural profitable growth and ultimately deliver on our company’s mission.
“On behalf of the entire Oatly team, I want to express my deep gratitude to the team at the Singapore plant for the work they have done over the years.”
Oatly stated that as part of the closure, it anticipates paying between $20 million and $25 million in non-cash impairment charges in the fourth quarter of 2024.
It further stated that until 2027, there will be net cash outflows of $25–30 million due to restructuring and other departure expenses.
The company stated that its facilities in Europe will support its anticipated expansion in the Asia-Pacific area after the closure of the operation in Singapore.
