The food and beverage industry in Singapore is facing a shakeup as Yeo’s announces the retrenchment of 25 employees following Oatly’s decision to close its Singapore production facility. This closure marks the end of a three-year partnership between the two companies, leaving 59 workers in total affected.
In this article, we’ll explore the details behind Oatly’s plant closure, its impact on Yeo’s, and what lies ahead for both companies.
Oatly Shuts Down Singapore Plant: Timeline and Impact
- Plant Closure Announcement: Oatly, the Swedish oat milk brand, announced the closure of its $30 million Singapore plant, which was launched in October 2021.
- Reason for Closure: The company cited the move as a strategy to “improve future cost structure and reduce capital expenditure needs.”
Impact on Employees
A total of 59 employees are affected by this decision:
- 34 Oatly Employees: Directly employed by Oatly and impacted by the cessation of operations.
- 25 Yeo’s Employees: Specifically hired to support Oatly’s production under the partnership established in 2019.
Yeo’s Retrenchment Plans
Yeo’s has taken several measures to mitigate the impact on its employees:
- Reassignment Efforts: Successfully placed 16 employees in other roles within the company.
- Severance Packages: Retrenched employees will receive fair compensation based on their salary and years of service, adhering to tripartite guidelines.
- Support for Employees: Providing job-matching services and career guidance in collaboration with the Food, Drinks and Allied Workers Union (FDAWU).
Financial Adjustments for Yeo Hiap Seng
Yeo Hiap Seng (YHS) will receive $32 million in exit compensation from Oatly, to be paid in installments by January 2027. This compensation includes:
- Asset buyouts
- Compensation for order obligations
- Loan repayments
- Future lease payables
What’s Next for Yeo’s and Oatly?
- For Yeo’s:
Despite the cessation of production, Yeo’s will continue to distribute Oatly products in Singapore and Malaysia. The company has also reassured stakeholders of its strong balance sheet and commitment to pursuing growth opportunities. - For Oatly:
Oatly’s growth in the Asia-Pacific region will now rely on its European facilities, signaling a shift in its production strategy.
Industry Reactions and Market Insights
This announcement has sparked discussions about the sustainability of food and beverage operations in Singapore. Analysts suggest that rising costs and evolving market dynamics may have contributed to Oatly’s decision.
On the financial front, Yeo Hiap Seng’s shares remained steady, trading at 58 cents as of 10:10 am.
Conclusion
The closure of Oatly’s Singapore plant and the subsequent layoffs at Yeo’s highlight the challenges faced by global and local businesses in adapting to changing economic landscapes. While Yeo’s is focusing on recovery and growth, the broader implications for Singapore’s F&B industry remain to be seen.
As the situation unfolds, both companies are committed to supporting their employees and stakeholders during this transition.
