Nestlé Co-Packing Plant, United Kingdom

Nestlé, in July 2009, opened its new contract-packing facility in York, UK. The facility is located near Nestlé’s distribution centre for the northern region of the UK. Construction of the facility was started in June 2008 with an investment of £1m. An abandoned warehouse known as CF1, previously a cricket field, was selected for constructing the new facility. Production had already started in June 2009 although the facility was officially inaugurated in July 2009. About 100 jobs were created with the construction of the new facility.

IPS First will manage production at the new facility. Local engineering firm Adam Engineering was contracted to develop the packaging lines for the new facility. The company provides precision engineering services to a variety of industries such as automotive and food processing.

The new facility will initially provide co-packing for Nestlé’s confectionery brands such as Aero and Kit Kat and later expand to provide co-packing for Nestlé’s brands from around the country. The facility is highly flexible and can adapt quickly and efficiently to provide co-packing for Nestlé’s chocolate bars and coffee brands. IPS will manage about 200 to 400 product lines related to Nestlé’s brands, which may also comprise brands of other companies.

Packaging systems

About six packaging lines of machinery are installed at the new facility. The flow-wrapping and cartoning lines are very flexible and can be shifted from the new facility to Nestlé’s second packaging site in Bardon within 24 hours.

Nestlé has also introduced fully recyclable packaging at the new facility. The company has replaced plastic trays with paper card trays. The new packaging will reduce the overall packaging by 200 tons compared to 2007. Use of the new packaging reduced weight of Nestlé’s medium and large selection boxes by another 17% and 20%.

Benefits

Nestlé constructed the new facility to consolidate its contract-packing operations. Earlier, Nestlé’s two distribution sites at York and Bardon were served by five co-packaging facilities which were situated at different locations across the UK. The length of the supply chain was too long and needed restructuring. In June 2009, along with IPS, Nestlé started plans to consolidate its packaging operations. With the construction of the new facility, the number of co-packaging facilities was reduced to two. These include the new facility at York and another at Bardon.

The new facility will help Nestlé reduce its transportation costs resulting from moving goods across the country. Nestlé’s factory at York manufactures all the confectionery for its Christmas selection boxes, which were transported to various packaging facilities. With the construction of the new facility the confectionery only needs to be moved next door for packaging. The facility will provide flexibility to the company to create customised packaging and meet rise in demand.

The York plant will also reduce the need to use 4,000 lorries to transport goods and as a result decrease Nestlé’s carbon emissions by 300,000t/y. The EU is increasingly proposing that companies should adopt more sustainable distribution systems across the food and drink supply chain. As a result food and beverage companies are under greater pressure to reduce their carbon footprints and restructure their logistics supply chain. A range of proposals have been put forth in the EU which plan to create a new toll of a few cents per kilometre on freight haulage of companies. In the light of these developments, the plant will prove to be very beneficial for the company.

Financing

York MP Hugh Bayley helped IPS achieve the loan guarantee for construction of the facility. The loan was provided under the Enterprise Finance Guarantee Scheme by the government. The scheme seeks to help small businesses which are finding it difficult to secure finance due to the current stringent lending conditions. It helps small businesses obtain bank loans of up to £1m.