Wool Processing

Modern early stage wool processor closes in Melbourne

Terry Sim January 13, 2025

EARLY stage wool processing in Australia has lost one of its major players with the closure of Victoria Wool Processors in the Melbourne suburb of Laverton North.

Over-capacity and declining profits in the sector, aggravated by rising costs and declining wool production, have been blamed for the decision.

Twenty one workers have lost their jobs and the plant’s specialised machinery could end up as scrap metal.

After 34 years as an early-stage wool processor in Australia, Victoria Wool Processors announced on 20 December 2024 it was closing its plant in Melbourne but would continue to trade Australian wool.

The plant’s closure leaves only the EP Robinson plant in Geelong and the Michell Wool operation in Adelaide able to undertake early stage processing of wool in Australia.

VWP general manager David Ritchie said the two remaining early-stage wool processing plants in Australia were processing less than 5 percent of Australian grown wool and VWP management hoped they can continue to operate and support the industry.

Before its closure, Mr Ritchie said the VWP scouring and carbonising plant was processing about 30,000 tonnes of greasy wool a day for overseas clients.

He believed it was unlikely there would be any expansion in early stage wool processing in Australia until there was a dramatic increase in domestic wool production.

Mr Ritchie said unfortunately, 21 employees were made redundant by the closure decision, which was not an easy one to make for its owner and the management team. They cited overcapacity within the early-stage wool processing sector as the major cause for the closure.

“This has been caused by the continued decline and projected further declines in the size of the Australian wool clip and with fully justified biosecurity measures preventing the importation of any substitute greasy wool,” Mr Ritchie said.

“Early-stage wool processing requires specialized equipment that is unsuitable for other fibres that further restricts an alternative use of the equipment.”

Mr Ritchie said management noted that the revenue per kilogram of wool processed including revenue from the sale of wool grease was below the 2000 price up to 2016 when due to increased gas price there was no alternative but to increase prices that had the corresponding effect of reducing volumes. At its peak in 2015 there were 45 employees working at the site and processing 20,000 tonnes of greasy wool.

Victoria Wool Processor Group was established by its founder and current managing director Jim Kim in 1983 when he came to Australia to source processed wool for export to the rest of the world. Frustrated by what he considered to be inferior quality in processing and high cost he established his own processing business in 1990 in Melbourne with a second-hand machine.

The company originally was established to trade wool in 1983 but built volumes so that it could justify opening its own start into early-stage wool processing in 1990 with further expansion in 1994, 1996, 2000 and 2005.

Mr Ritchie said unlike most other plants — often foreign owned — that were established around the time it did not receive any government funding and relied upon private capital and endeavour.

Mr Ritchie said annual operating costs increased by $350,000 in 2022 with new EPA Victoria wool scouring waste treatment regulations “deemed that it was dangerous to the environment.” He said power costs also increased dramatically in 2017, but have started to ease.

“The big one is that there is over-capacity already in the early stage processing part of the industry worldwide.

“Certainly on current volumes, you only need one factory.”

He said there is also big uncertainty over future greasy wool production, with the industry’s latest 2024-25 forecast set at 285 million kgs.

“I think they are a bit conservative, it could drop further.”

Mr Ritchie said the specialised VWP equipment has been offered to the remaining Australian processors.

“They don’t want it and there is a fair chance it will end up as scrap metal, and it is probably the most modern plant in Australia.”

He said there is some overseas interest in the machinery, but when there is over-capacity in an industry no-one has money to invest.

 

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Comments

  1. Helen Clark, January 17, 2025

    I was unaware that we even had early stage processing capacity in Australia. I think many growers like me would be interested in supporting this industry and processing our own wool. Such a shame to see it go. We need to process wool in Australia to the sales level. Go into any wool/yarn shop and you will struggle to find Australian wool among the many types on offer from all over the world

  2. George Turner, January 17, 2025

    The government’s management of Australian gas resources has be so destructive to our domestic businesses.

  3. Andrew Farran, January 13, 2025

    Another bit of history bites the dust.

    Not even AI could save this.

  4. Peter Small, January 13, 2025

    It is impossible to run a modern economy anywhere in the world without cheap energy. Australia, the biggest producer of gas in the world together with Qatar, should have the cheapest energy, but no we have one that is the most expensive. Eventually the last industry in this country, the coffee shop will be at risk. Successive governments, John Howard’s being the worst have landed us with expensive energy and a paralysed industry sector.

    • Brendan Mahoney, January 14, 2025

      The EPA had a hand in there. Typical Labor government that hates farmers.

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