Sven-Arne Løfving, plant manager of the Leaf facility in Denmark, speaking to ConfectioneryNews.com said that labour costs were the fundamental reason for the transfer:
“The labour costs in Slovakia are one fifth or 20 per cent of that in Denmark,” he said.
Løfving added that another reason for the transfer was that the lines it was using in its Denmark plant are older and not as efficient and that Leaf is investing in a new extrusion line in Slovakia.
Regular Production Transfer
Martina Zomborská, a spokesperson for Leaf Slovakia, told this publication that the company has an integrated production chain in Europe, which means that it transfers products from one factory to another on a regular basis.
She said that if, for example, Leaf is running a factory on full production and needs to boost volume of a particular line, it will transfer the product elsewhere. Zomborská added that Leaf is “always looking at ways of improving production efficiency in our European supply chain structure.”
Increased production
The production transfer will increase the capacity of the Slovak plant from 47 per cent to 60 per cent.
Zomborská said: “Four production lines running in Leaf Slovakia at the moment produce 7,500tns of Chewits, extruded products and pastilles of specific flavours. With a new technology we will be ready to produce additional 1,500tns of extruded products, so overall annual production will increase from 7,500tns to 9,000tns.”
The expansion will also create 53 new jobs within Leaf's Slovak business, with no cuts being made in Denmark.
In regards to further expansion plans Zomborská said, “The company wants to grow on existing markets with current brands and existing segments. Individual plants will expand according to the market needs.”
Leaf, which is owned by private-equity firms CVC Capital Partners and Nordic Capital, will launch a line for Malaco-branded toffees, strawberry-flavoured sweets and salty confections at the Slovak site in January.
The company said that salty confections represent strong brands on Scandinavian market, which is where all of the products will be exported to: Denmark, Norway and Sweden. In addition, the products will also be exported to Germany.
Leaf is a leader in the pastilles segment, and has top three positions in the sugar confectionery and candy segments, with brands such as Läkerol, Malaco, Evers and Lakrisal.
Leaf currently employs around 2,500 staff, working in sales offices and factories in Finland, Sweden, Norway, Denmark, the Netherlands, Belgium, Italy, Germany, Baltics, United Kingdom, Singapore and Slovakia.