Oatly to close its Singapore plant, 34 employees affected

SINGAPORE: Swedish drink company Oatly announced on Wednesday (Dec 18) the closure of its Singapore plant in Senoko after three years in operation.

The move aims to improve the company's "future cost structure and reduce future capital expenditure needs", the company said in a press release.

Oatly was in a partnership with Singapore food and beverage company Yeo's to produce its oat milk. The S$30 million (US$22 million) production plant opened in October 2021.

In response to CNA's queries, Oatly said 34 employees in Singapore will be affected by Wednesday's announcement. This will take place "through a phased approach over the coming months", a spokesperson said.

"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," the spokesperson added.

CNA has contacted Yeo's for more information.

The Food, Drinks and Allied Workers Union (FDAWU) said that Oatly is non-unionised. 

FDAWU president Julie Cheong said that it will support affected union members where required by leveraging the wider labour movement network.

This includes using NTUC's Employment and Employability Institute to provide job matching and career advisory services.

Affected members can also call or email FDAWU for assistance. 

In 2021, Oatly also opened its first production facility in China. The plant in Ma’anshan in Anhui province has the capacity to produce about 150 million litres of oat-based products annually, compared with the Singapore plant's 60 million litres.

Oatly CEO Jean-Christophe Flatin said that the company's decision to separate its greater China business from its Asian business has led to "significant improvements" in the health of its greater China business. 

"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 added.

"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."

As part of the closure, Oatly said it expects to incur non-cash impairment charges of about US$20 million to US$25 million in the fourth quarter of 2024. 

Restructuring and other exit costs will also result in US$25 million to US$30 million of net cash outflows through 2027, it added.

Following the closure of the facility in Singapore, the company said that its expected growth in the Asia-Pacific region will be supported by its facilities in Europe.