59 workers to be laid off due to Oatly S'pore plant closure
Beverage giant Yeo Hiap Seng will lay off 25 out of 41 employees who are directly involved in the manufacturing operations of Swedish oat milk producer Oatly.
The Straits Times understands that these 25 employees are in addition to the 34 Oatly employees affected by the closure of the Oatly plant here, bringing the total to 59.
“Yeo’s has made every effort to reassign as many as possible, and has successfully placed 16 employees in other roles within Yeo’s,” the company said in a statement accompanying a bourse filing on Dec 19.
The 25 affected will receive severance packages based on their salary and years of service, it added.
Yeo’s said its affected employees were hired specifically to support Oatly’s production at Yeo’s Senoko plant, and the layoff is a direct result of Oatly’s evaluation of its supply network.
The Swedish producer had announced on Dec 18 its plans to close its Singapore facility in a bid to improve the company’s future cost structure and reduce future capital expenditure needs.
Yeo’s noted that it has partnered Oatly in Singapore since 2019.
“While manufacturing operations will cease, the group remains committed to supporting Oatly’s distribution in Singapore and Malaysia,” Yeo’s said.
It added that it informed the Food, Drinks and Allied Workers Union (FDAWU) upon the announcement by Oatly on Dec 18.
Yeo’s said it has been working with the union throughout this process to ensure adherence to tripartite guidelines, and that fair compensation is provided to affected employees in line with the company and union’s collective agreement.
The FDAWU and Yeo’s will also work with the National Trades Union Congress’ Employment and Employability Institute to extend job matching support and career guidance to these employees.
Yeo’s chief executive Ong Yuh Hwang expressed regret at having to make the decision.
“Our priority is to support our colleagues and to reduce stress and anxiety for them during this period.
“To this end, we will work closely with the union to ensure affected employees receive all the necessary resources during this challenging time.”
The announcement by Yeo’s comes after an Oatly spokesman confirmed that 34 of its staff members here will be affected, through a phased approach over the coming months.
The spokesman 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.”
In the bourse filing, Yeo’s chief financial officer Lai Kah Shen said both parties have consequently entered into an exit agreement to dissolve their tie-up to produce Oatly beverages in Singapore.
As a result of Oatly’s decision to exit Singapore, the local Oatly facility, which operates under a co-packing agreement with Yeo’s, will cease producing Oatly drink products by the end of 2024, Mr Lai said.
Based on the exit agreement, Yeo’s will receive exit compensation amounting to $32 million in instalments, to be paid in full by January 2027.
The compensation comprises an asset buyout, compensation for order obligations, repayment of loans and future leases payments.
However, Mr Lai stressed that Yeo’s balance sheet remains strong and that it would continue to pursue inorganic and organic growth opportunities.
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