Espersen plans big investment in Poland after deal for Royal Greenland plant

Denmark-based A.Espersen is planning to invest in renovating an area in the plant it is acquiring from Royal Greenland in Poland, to accommodate the production from a factory in its home county that is to close. Undercurrent News reports.

The Royal Greenland plant, which is right next to Espersen’s own factory in the city of Koszalin (see below), on Poland’s Baltic coast, gives the Danish firm the chance to move the processing currently being done in Fredericia. In April, Espersen announced the Fredericia plant would close next year.

“There is about 8,000 square meters [in the Royal Greenland plant] that we are going to update and renovate to gradually move production from Denmark,” Klaus Nielsen, Espersen CEO, told Undercurrent News.

All of the production should be moved from Fredericia by the end of 2018, he said.

Renovating the plant Espersen is buying from Royal Greenland will take a “significant investment”, he said, declining to reveal an exact figure. “What we are going to invest in 8,000 sq. meters is quite large, for us. But, the cost of processing in Poland is quite different, so that is the business case.”

Espersen has a lack of space in its plant and Royal Greenland has excess capacity, said Mikael Thinghuus, CEO of Royal Greenland.

“Fish processing is a volume business, so it makes a lot of sense for someone with too much space to join with someone with a lack of space. We have been discussing this for quite a while and, in the end, this is the model we chose,” he told Undercurrent.

The shift of production is going to happen in stages, said Nielsen. “We will take over the plant from Sept. 1, then you have to get all the permits [for building]. Then, we will start to construct and move the lines one-by-one to the plant over 2018.”

When the production is moved from Fredericia to Poland, the plant will be doing 20,000 metric tons “plus” of finished products, said Nielsen.

In he medium term, Espersen and Royal Greenland have a “strategic agreement” to keep the plant running exactly as it does today. This means Espersen is going to “serve Royal Greenland with all the products they produce today, as if nothing has happened”, he said.

“Espersen acquires and runs the factory and, together with their own [factory in Poland], there will be synergies on processing and distribution. We will continue to purchase the fish. It is not the same fish they produce currently, its mainly flatfish and some salmon, and we will continue to sell and market the products as we do today,” Thinghuus told Undercurrent.

The move suits the direction Royal Greenland, which sold its pollock processing factory in Germany in 2013, is moving in, he said.

“It takes us out of processing species not from Greenland or Canada”, a country the firm moved into with a deal for Quin-Sea Fisheries, he said.

“Where we have access to quotas, or have expertise in procurement, it makes a lot of sense for us to do the processing. You want to specialize. Also, to some extent, you want to specialize geographically. It’s a long way from northern Greenland to Poland.”

For Espersen, the addition of more flatfish – such as plaice, lemon sole and dabs – is a welcome widening of its species range, said Nielsen.

“We are mainly cod and haddock in our primary processing. The Royal Greenland plant is more or less only flatfish. This will broaden our level of expertise, we will have another four, five new species,” he told Undercurrent.

Nielsen declined to comment on how long this arrangement is for. “We are not revealing how long, but it is for a few years,” he said.

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