With the investment in a state-of-the-art production platform, we will achieve a more efficient manufacturing structure with a flexibility to tackle higher labour and energy costs, as well as significant cost savings and further production capacity. At the same time this enable us to continue our sustainability path and secure and improve on the delivery on Cloetta’s long term profitability target.
Henri de Sauvage-Nolting
President and CEO of Cloetta
A modern production facility will provide a setting for high-quality and competitive confectionery manufacturing as well as opportunities for future expansion. Such an investment and related consolidation will facilitate further growth ‒ especially in the non-Nordic markets ‒, enable significant cost savings, and support our commitment to the Science Based Targets initiative.
We have considered multiple options and possibilities, which also includes locations. By staying in the Netherlands, we can continue to benefit from our current competence by offering the majority of our existing employees a position in the new factory. In addition, this is a strategic geographic position based on our sales markets and brand heritage, as well as ideal from an environmental footprint point of view.
We have concluded that there is a need for modernising our manufacturing network. Various options have been evaluated, and the conclusion is that this is the most attractive one supporting our long-term strategy; delivering organic growth, improving profitability as well as for our sustainability agenda.
There are naturally always risks associated with projects of this kind, including delivery risk of components as well as inflation on the dedicated capex. We are managing the risk on the delivery by partnering with top engineering and industrial equipment manufacturers and we have taken the capex inflation risk into consideration for the provided capex guidance. However, given the uncertain market environment with substantial cost inflation and need to increase prices to protect our profitability, we see this initiative as even more important to secure our future profitability as it also hedges against inflation on the labour component.
The major planned investments are expected to be initiated in 2025.
Once all permits are in place and the engineering has been completed, the expected time frame is 18 months to build the new greenfield and bring to life, which is in line with industry standards.
In total, approximately 350 employees in Belgium and the Netherlands will be affected by the initiative and our ambition is to handle the process with the utmost respect and care for our employees. By staying in the Netherlands, we can continue to benefit from our current competence.
Our main alternative is in the municipality of Roosendaal, where we have an option for a piece of land inside a large existing industrial area. Cloetta is already operating two of the facilities that are to be closed in the same municipality and by staying in the region we retain local job opportunities and competence. For further information on the option of land we have, please refer to the municipality of Roosendaal, https://roosendaal.nl/proces-cloetta
Cloetta has an ongoing dialogue with the representatives from the municipality of Roosendaal that has given Cloetta the option for a land plot, as well as with all relevant regulatory institutions and other local parties that are residing not far away from the designated, existing industrial area. Cloetta acknowledges that this type of projects can generate opinions and intends to remain responsive and keep both local and investor stakeholders informed on a continuous basis.