04.11.2004: Denofa's oils and fats refinery is to close down at the end of this year. This entails a workforce reduction affecting 110-120 employees, approximately 100 of whom will be given notice of dismissal.
The oils and fats refinery processes vegetable and marine oils for a variety of oil and fat products for the food and animal feed industry. The company's markets and operating parameters have declined drastically in recent years and the refinery has been operating at a substantial loss, despite the improvement processes and the measures that have been implemented to introduce new products.
There are several reasons for the negative trend. The market for vegetable oils has become difficult for Denofa due to the ineffectiveness of the customs barrier that was intended to protect Denofa's oil and fat production. In addition to this, changes in consumer habits have affected Denofa because demand has moved from hardened fat products to liquid oils. Furthermore, exports of hardened fat made from fish oil have become less profitable due to the high price of fish oil and low demand resulting from the unfortunate health profile of these products. In total, these changes have led to tougher competition from other actors, pressure on prices and a loss of large volumes for Denofa, which have resulted in low capacity utilisation at the factory.
The decision to close down operations concerns only the fat factory. Work is still in progress on alternatives for further operation of Denofa's extraction plant, which produces meal for animal feed and raw soya oil from soya beans. The alternatives include working with new partners. Processes have also been initiated to find new business for the factory site in order to create new jobs to replace the ones that will now be lost.
A process is now being planned in cooperation with trade union representatives concerning compensation for the employees who are affected and practical matters in connection with the workforce reductions.
The decision to close the oils and fats refinery was made by Denofa's Board of Directors on
4 November. The employees were informed of the decision at a meeting of all employees immediately after the board meeting.
Denofa was founded in 1912 and has just under 200 employees. The company is part of Borregaard, which is Orkla's Chemicals business.