State intervention a success for SPC Ardmona, staff, fruit growers and consumers

The last Victorian government's support for beleaguered Goulburn Valley plant sparks dramatic turnaround.

Ideological economists and politicians hate nothing more than governments picking winners.

They especially hate it when the winners win.

So it must be with some dismay that those in Canberra who fiercely opposed providing support for Australia's last major fruit canner – SPC Ardmona at Shepparton – find that the company is fighting its way back, thanks to $22 million in support provided last year by the Napthine Victorian government.

When it found itself in trouble last year – after struggling to survive for some time in a fiercely competitive trading environment exacerbated by a high Australian dollar – SPC Ardmona sought federal government support.

Prime Minister Tony Abbott was having none of it.  He and Treasurer Joe Hockey were dead against "corporate welfare" with Abbott saying bluntly: "We have made it absolutely crystal clear that if a business is in trouble, the way to salvation is not federal government handouts".

Thanks to this approach the automotive industry is being driven out of Australia with Ford closing next year and Holden and Toyota due to go the following year.


But not all Coalition members went along with the push. Federal member for Murray Sharman Stone mounted a fearless campaign to save the SPC canning plant at Shepparton and the orchards that would have been bulldozed had the plant closed.

Stone was joined by the then Coalition state government which stepped in and provided $22 million.

SPC's parent company, Coca-Cola Amatil, an Australian company with a 29 per cent Coca-Cola Company shareholding, injected a further $78 million to buy new equipment and help SPC develop new products.

As a result 2700 jobs in the Goulburn Valley that were dependent on SPC have been saved.

Instead of paying unemployment benefits, the government is collecting income tax.

Instead of families being uprooted, a community has been saved.

Instead of joining the exodus of manufacturing from Australia, SPC is bouncing back. 

This is due to a number of factors. The mining boom is over and after more than a year of trading at or above parity with the US dollar, the Australian dollar is now worth about US80¢, greatly helping those exporters and import-competing Australian industries that still survive. 

Secondly the dumping of canned food into the Australian market is finally being officially recognised and dealt with.

For some years canned tomatoes were being sold in Australia at a price lower than production costs.

But last year the Anti-Dumping Commission found 103 of 105 Italian exporters were dumping their product in Australia.

The commission is now re-examining the two others.

But most importantly the Australian consumer has woken up to the issue, not only rallying to buy SPC Ardmona products when the threatened closure of the plant received widespread publicity, but also becoming aware that many of the competing imported products did not meet desired standards.

Consumers have reacted to the imported frozen berries hepatitis scare and the revelations of lead content and arsenic in imported canned fruit.

The major supermarkets have reacted too. Last March, Woolworths broadened and extended a deal it initially entered into in 2013 with SPC Ardmona to have the local producer supply Woolworths Select brand tinned fruit. 

Woolworths said it would continue to sell SPC Ardmona's brands, including Goulburn Valley and Ardmona, making SPC Ardmona the supermarket's largest supplier of tinned fruit.

But SPC Ardmona is not just relying on the big supermarkets.

The government funds are being used to develop and market new products.

A company spokeswoman said the future was bright. In 2014, driven by successful new product launches and productivity improvements, SPC delivered significant improvement in earnings to produce a close to break-even result.

"We are implementing a transformation plan to revitalise the brand portfolio and return the business to profitability," she said.

"We have a strong pipeline of innovative fruit-based snack products backed by a disciplined capital investment plan that will modernise our production facilities and establish a lower cost position."

Releasing the group's results this year, Coca-Cola Amatil's Group managing director Alison Watkins said they wanted the business to be right for the next five or 10 years, not just the next one year.

Stone said the government-provided funds were not spent on relieving debt or redundancy payments but on innovation. 

As a result the company has moved into the snack-food market and tourism and hospitality venues and is selling its new brand Perfect Fruit Super Strawberry and Mango A-go-go ice-creams.  

A social media campaign #SPCSunday also helped boost sales.

But beyond the company's control in the canned fruit market is the issue of product labelling.

If consumers want to buy a tin of peaches grown and canned in Australia, they need clear labels to know that that is what they are getting.

We've all seen "Made in Australia from local and imported ingredients" – a piece of information that suits some producers but confuses consumers as much as it enlightens them.  

As long as such labels continue to be permitted not only will Australian producers like SPC Ardmona be disadvantaged, but customers will lose out too.