GK merging Canning and Nalpro factories

Food and financial services conglomerate GraceKennedy Limited is investing US$3 million in the construction of a second plant at the Grace Food Processors (Canning) complex, to facilitate its merger with another of the group’s manufacturing operations, National Processors or Nalpro.

The merger will see the relocation of Nalpro’s operations from Temple Hall in rural St Andrew to Canning’s complex in Kingston.

National Processors, which operates under GK Food & Services, has been manufacturing drink crystals, cereals, and dry mixes for soups for about 40 years. Canning produces canned vegetables, sauces, and beverages, including Grace Tomato Ketchup and Tropical Rhythms.

GraceKennedy decided to marry their operations, having set new targets to increase manufacturing output while driving down cost.

The conglomerate’s earnings have held up despite the pandemic and was tracking at 33 per cent above 2019 levels at the end of the third quarter. Over the nine months profits amounted to $4.93 billion on revenues of $86.1 billion. But Group CEO Don Wehby has long telegraphed that he doesn’t just want to be making profits today. His eye is on the long-term horizon, in which the group sustains and grow earnings as an international consumer company, with more geographically diversified income streams. As such, targets are constantly refined.

Construction of the new plant is set for some time between April and June and will last for a projected 18 months. In the meantime, GK will be looking to reassign some of Nalpro’s staff of 80 to the Canning complex. The majority of the employees are expected to join the team of 150 at Canning, Wehby told the Financial Gleaner.

“We haven’t worked out the final details but most of the staff will be offered employment as well as they will get exposure to operating the lines at Canning,” Wehby said.

Andrew Wildish is in charge of Nalpro as general manager, while Dave Mitchell is in charge of operations at Canning, but it’s yet to be decided who will end up in charge of the merged entity.

“We have two competent managers in place and we will make a decision when construction of the project is closer to completion. They are both doing great in their respective factories, so we will make a decision at the appropriate time,” Wehby said.

The construction at Canning is expected to be completed by the second quarter of 2022, at which time, GraceKennedy will also be looking to put the Nalpro factory up for lease or sale. The equipment at Temple Hall will be relocated to Kingston.

Over the past five years, GraceKennedy has invested some US$12 million in upgrades to its manufacturing assets. With the merger, it now operates five manufacturing plants across various parishes in Jamaica.

Wehby declined comment on the expected savings from the merger, saying only that it would be significant.

“When we look at manufacturing and our overall objectives, we want to ensure that we can export at least half of what we produce,” he said while noting that the ratio is currently 30 per cent.

“When we looked at how we become cost-effective and internationally competitive, it was clear to us that the factories in the Corporate Area, it would be better for us to have Nalpro and Canning under one roof,” he said. “It’s a difficult decision but at the end of the day we have to look at what is the vision for GraceKennedy and how best to realise that vision.”

Canning was selected for the merged operations because of its proximity to the ports of Kingston.

karena.bennett@gleanerjm.com