Tate & Lyle To Manufacture Sucralose Elsewhere

We've seen it in the fashion industry, the IT field, and the pharmaceutical industry, and now we are seeing it in the food industry.

With so many US and European companies relocating manufacturing plants to Asia these days, the following information may not be that surprising.

British sugar and sweetener company, Tate & Lyle, announced today that they will be closing the sucralose (a.k.a Splenda) facility located in McIntosh, Alabama, to produce sucralose only in Singapore.

Based on some recent scientific advancements, the facility in Singapore will be able to manufacture the product more efficiently, with a 25% increase in yields, meeting global product demands in a timely fashion at reduced costs.

Tate & Lyle CEO, Iain Ferguson, told reporters,

"This has had the effect of significantly increasing our production capacity to the extent that, for the moment, we can now meet demand from just one of our two plants."

The Alabama facility will retain a small number of employees and be able to restart production of sucralose within a few months if necessary. Still, the move will result in the loss of 50 US jobs.

The decision also comes after analysis of the global economic climate and demand for Tate & Lyle's products like sucralose, starches and ethanol.

According to an update in Rueters, Tate & Lyle has issued two profit warnings this year and the stock has lost over 36% of it's value over the last year.

The company feels that it's difficult to predict the outlook for 2010 in the face of the prevailing economy, so they've acted to ensure future success. Quick cost savings are anticipated as a result of the facility closure.

"We have recognised an exceptional charge of £97 million in the 2009 financial year reflecting the impairment of the carrying value of our McIntosh plant.

"Anticipated cash costs of £60 million associated with this decision will be paid over three years and recognised as an exceptional charge in the year ending 31 March 2010.

"These cash costs are expected to have a three year payback resulting from the reduced operating costs of having a single plant", CEO Ferguson added.

In addition, an international ruling last month now permits other countries, like China, to manufacture and market low-cost imitations of sucralose sweeteners.

Let's hope for T&L's sake that these less expensive alternatives to sucralose sweeteners are also "cheaper" in taste and quality.