Poppy processor Tasmanian Alkaloids is looking to cut staff at its Westbury processing facility because of a worldwide slump in demand in the opiate industry.
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Tasmanian Alkaloids Pty Ltd chief executive officer Ross Murdoch said that consultation with staff in the a raw material business would take place over the next two weeks.
It is understood that up to 20 redundancies are being considered as the processing operation reduces from a seven-day, 24-hour operation to a five-day, 24-hour a day operation.
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Tasmanian Alkaloids employs about 120 people.
"Tasmanian Alkaloids is looking at modifying our operating model because of market forces experienced in the global pharmaceutical industry," Dr Murdoch said.
"The changes will include a restructuring across the company and some reduction of the workforce."
The use of opiates has been tightened in major markets such as the United States after the overuse of prescriptions and subsequent deaths from overdoses.
The industry in Tasmania has shrunk from a farmgate value of about $100 million in 2013 to about $40-$45 million in 2019-20.
Tasmanian Alkaloids extracts opiate products from poppy heads grown across 8000 hectares in Tasmania.
The company has recently announced plans to diversify into the production of medicinal cannabis and is constructing an $11 million facility at Westbury.
"A steady global reduction in opioid demand over recent years combined with future market demand signals has resulted in a decision by the company to switch to a five day 24hr a day manufacturing roster," Dr Murdoch said.
"This modified operating model has precipitated a restructuring across the company and an associated reduction of the workforce.
Dr Murdoch said the alkaloid raw material market was a highly competitive, price sensitive, global marketplace.
"We have remained competitive through consistent efficiency gains in the field and in our factory but unfortunately, the global decrease in demand for alkaloid raw materials has now necessitated the move to a reduced manufacturing shift pattern," he said.
"We do not take decisions like this lightly and see the proposed change as essential if we are to ensure a strong future for Tasmanian Alkaloids.
"Tasmanian Alkaloids remains a strong business with excellent diversification options; the diversification of our company into Medicinal Cannabis is progressing rapidly and is on track to deliver on our production commitments to customers and financial goals this financial year.
"With the support of the state government we have been able to accelerate our capital works in this area opening some redeployment and new opportunities to potentially impacted employees."
The Tasmanian Alkaloids move comes in the wake of the departure of Mike Doyle from rival processor SunPharma at the end of March.
Poppy Growers Tasmania and processors are expected to begin within weeks negotiation on price and area for the 2020-21 season.
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