Oatly shuts down Singapore plant: 59 employees to be laid off, including 25 from Yeo's

Local beverage manufacturer Yeo Hiap Seng — better known as Yeo's — announced plans to lay off 25 employees as Oatly shuts down its Singapore facility.

Oatly, a Swedish drink manufacturer, partnered with Yeo's in 2019 to build a $30 million plant in Singapore to produce its oat milk. The facility opened in October 2021.

On Wednesday (Dec 18), Oatly announced the closure of its manufacturing plant in Singapore as part of its "asset-light supply chain strategy" with a goal to reduce costs and improve overall efficiency.

34 of Oatly's staff in Singapore will be affected by the closure, reported CNA.

In response to AsiaOne's queries, Yeo's said on Thursday that 41 employees are directly involved in Oatly's operations. 16 of them have been moved to other roles within Yeo's. 

The remaining 25 employees will be retrenched, and will receive severance packages based on their salary and years of service.

"The affected employees were specifically hired 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 company said. 

Yeo's CEO Ong Yuh Hwang promised that affected employees will receive "all the necessary resources during this challenging time".

The company also said that it is working with the Food, Drinks and Allied Workers Union (FDAWU) and NTUC's e2i (Employment and Employability Institute) to ensure that affected employees receive fair compensation as well as "job matching support and career guidance".

While Yeo's will cease production of Oatly drink products by the end of this year, it said it "remains committed to supporting Oatly's distribution in Singapore and Malaysia". 

Oatly reported an operating loss of US$408 million (S$555 million) for FY23 — their third consecutive year in the red since going public in 2021.

Following the closure of the facility in Singapore, Oatly expects growth in the Asia-Pacific region to be supported by existing facilities in Europe.

Oatly estimates that restructuring and other exit costs will result in US$25 to US$30 million of net cash outflows through 2027, after taking into consideration anticipated proceeds from selling certain equipment. 

On the other hand, Yeo's posted a net profit of $6.7 million for FY23 and maintained a positive outlook for future growth.

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dana.leong@asiaone.com