CONSTRUCTION work has started on a new $115 million meat processing facility on Brisbane’s southside to portion control, value-add and package meat products for Woolworths supermarkets’ northern supply chain.
The new facility at Heathwood is expected to be commissioned in late 2019, and follows two similar factories built earlier at Bunbury in WA and Truganina, near Melbourne.
The project comes as UK-based Hilton Food Group and Woolworths announce plans this week to restructure their Australian meat processing joint venture.
The agreement includes long-term contracts for Hilton Foods Australia to supply Woolworths with packaged and value-added meat products. At the end of a transitional period of two years, Hilton Foods Australia will buy the WA and VIC plant assets, for a book value expected to be A$85 million, a joint statement said. At this point, all the operating assets are owned by Woolworths.
The new Queensland facility is expected to be commissioned and operational at the end of the two-year transitional period. As part of its gradual transition to the new Heathwood factory in two years’ time, Hilton is already leasing processing facilities in Brisbane, producing large volumes of mince and other items for retail stores in Queensland and NSW.
Hilton will begin full operational control of the existing Bunbury and Truganina plants from July 1 this year.
“It is hoped that this extension to the current partnership will enable Hilton to continue to service Woolworths’ store network under the current long-term 15-year contracts,” yesterday’s joint statement said.
The joint venture between Hilton and Woolworths was struck in January 2013 through a 50pc interest in a new company, Woolworths Meats Co, when the original Bunbury Meat Centre was built in WA at a cost of $31 million.
Two years later the JV commissioned its second new processing facility in Victoria.
Hilton chief executive Robert Watson indicated that as part of the transition, Woolworths employees currently working in Bunbury and Truganina would join Hilton.
“We have been working closely with Woolworths for five years and we have a deep understanding and respect for each other. Our long-term partnership with Woolworths is growing, and this is the next phase of an even stronger relationship,” he said in the statement.
“The long term contract between us displays the mutual trust we have in our partnership and Hilton looks forward to working with the Woolworths team to further strengthen our world class meat offer in Australia.”
Woolworths director of meat, Pat McEntee, said the current joint venture had created value within the company’s meat supply chain, and looked forward to extending the partnership to deliver affordable, innovative and convenient protein choices for its customers.
The new 45,000sq m facility Queensland factory now under construction at the Logos Heathwood Logistics Estate will supply Woolworths stores in Queensland and northern New South Wales with beef, lamb, pork and value-added meat products.
Following the closure of the Churchill abattoir near Ipswich in southeastern Queensland late last year, Woolworths has entered into an interim processing arrangement with Teys Beenleigh, not far from the new Heathwood development site
Rumours continue to circulate about logistical problems associated with long transport distances between Hilton/Woolworths processing hubs, distribution centres and retail stores in Australia, that have apparently caused some supply headaches for the Hilton joint venture. On Hilton’s home-turf in Europe, concentration of population and shorter distances makes the supply challenge easier, Beef Central was told.