Question

Coca-Cola Amatil to close South Australia plant, cut 180 jobs
Patrick Hatch
Published: February 22, 2017 - 10:43AM
Coca-Cola Amatil will close its manufacturing plant in South Australia, cutting about 180
jobs, and shift the work to Queensland as part of a $90 million supply chain restructure.
As part of its profit announcement on Wednesday, the beverage giant said it had reviewed its
operations across Australia and concluded it should increase production in Queensland and
Western Australia and close its plant in the Adelaide suburb of Thebarton.
4
"The review found that further development of our facility at Thebarton in South Australia
was constrained by its CBD location, site layout, dated infrastructure and expensive
logistics," CCA's managing director Alison Watkins said in a statement.
"This isn't a decision we have taken lightly, but we know it will be important for ensuring our
position in the market into the future."
The company unveiled underlying pre-tax profit of $417.9 million for the half year up 6.2 per
cent. Investors welcomed the news sending CCA's share price up almost 7 per cent to $10.60
in early trade.
The Adelaide factory produces glass bottles, fruit juice, dairy products and some alcoholic
beverages and Ms Watkins said CCA would provide financial counselling and help find new
jobs for workers affected by the 180 lost jobs. Existing administrative, distribution, and
recycling work would remain in South Australia, she said.
CCA will spend $90 million building a new glass production line and juice and dairy
production capacity at its plant in Richlands, on Brisbane's outskirts, in addition to the $75
million investment announced last year, the company said.
The Richlands plant will have lower operating costs, in part due to greater automation. Some
manufacturing from Adelaide will shift to Kewdale in WA, Moorabbin in Victoria and
Northmead in NSW, CCA said.
Shutting the Adelaide plant will save CCA $20 million a year from 2020, which would be
reinvested in the business, CCA said. CCA made the strategic announcement as it reported a
$257 million full-year net profit on Wednesday morning, down from $403 million last
financial year.
The company recorded a $171.8 million non-cash impairment charge against its troubled SPC
tinned fruit and vegetable business.
This story was found at: http://www.smh.com.au/business/cocacola-amatil-to-close-south-australia-plant-cut-
180-jobs-20170222-guia3a.html

Suppose that prices return to $15 and the workers take this is a sign to negotiate a pay rise
to $350 per day.
f) What will be the profit-maximising quantity of t-shirts if their negotiations are
successful? (2 marks)
g) Explain which of the cost curves will move and which will stay the same. (2 marks)

Answer 1

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