One of the biggest employers in Olds is ceasing operations there — putting more than 100 people out of work.
The Banner Pharmacaps plant will close by Oct. 31, its parent company Patheon Inc. (TSX:PTI) has confirmed. The news was contained in a March 8 release related to Patheon’s first quarter financial results.
In that release, the global company said closing its manufacturing facilities in Olds will cost approximately $3.7 million in severance and retention expenses, as well as $1.5 million in associated costs. It added that the action is expected to save $8 million a year.
Olds Mayor Judy Dahl said the closure of the Banner Pharmacaps plant will be “a huge economic loss” for the town.
In an investor conference call, Patheon chief financial officer Stuart Grant said shuttering the Olds plant will result in the elimination of about 130 positions.
Olds Coun. Harvey Walsh acknowledged that some of those workers commuted to Olds from elsewhere.
“There are also a fair bit that live in Olds also,” he said, pointing out that he knows local couples who both work at the plant.
Many of the positions are highly specialized, said Walsh, so alternate employment may not be readily available for the displaced workers.
Operating in Olds since 1981, Banner Pharmacaps produced and enclosed nutritional and pharmaceutical products in soft gelatin capsules.
It shipped these in bulk form, or in airtight blister packaging or bottles.
In addition to the Olds plant, Banner Pharmacaps has facilities in North Carolina, Mexico City and the Netherlands.
Patheon announced last October that it had struck a US$255 million deal to buy Banner Pharmacaps from Dutch company VION N.V. The sale was completed in December.
Walsh said the town knew changes were possible as a result of the sale, but wasn’t aware until Friday’s disclosure that the plant would close.
“It was a shock,” he said, adding that the matter was discussed at a council meeting on Monday.
In addition to the job losses, the closure of the plant will result in a loss of tax revenues, said Walsh.
Banner Pharmacaps’ facilities, at 5807 47th Ave., were purpose-built with specialized equipment like filtration and pressure differential systems.
“Hopefully somebody else steps into that facility,” said Walsh, who is the current chair of Central Alberta Economic Partnership — a consortium of communities and other interests in the region that promotes economic development.
Dahl said the town will work with the Olds Institute for Community and Regional Development to decide how best to proceed.
Patheon CEO James Mullen explained the rationale for the plant closure during the investor conference call.
“The decision was primarily driven by current resources and volume demand at the site, as well as our goal to fully optimize available capacity with a network of all Patheon and Banner sites.”
He said the company is working to transfer the Olds plant’s production to other locations.