At the end of the month, Traeger is ending operations at their pellet plant in Redmond, Oregon. The move that will displace nine workers, will effectively lower Traeger’s pellet production capacity.
According to Steve Curley, Director of Redmond Economic Development (REDI) in a comment to the Central Oregon Daily News, the plant closing is due to efficiency and excess production.
It’s going to be much more efficient for them not to have to bring their raw materials over to Central Oregon and then back as a finished productSteve Curley, Director of Redmond Economic Development
The move will displace nine workers at the facility. REDI is working on helping the employees find other opportunities in the area.
According to an SEC filing from when Traeger went public, the Redmond facility had an average production of 25,126 tons of pellets, with a max of 39,848 tons.
Traeger had noted on their last earnings call that they expected a decline in their pellet sales for 2023. The plant closure may be a casualty of too much production for their expected demand.
Last, we are expecting our consumables business to decline in 2023, primarily drivenby an expected sales decline at a large customer, who introduced a private label pelletoffering in the second half of 2022, as well as the lapping of load-in into the go-throughchannel due to new distribution in 2022.Dom Blosil, Traeger CFO
For Traeger, looking for a spot to cut costs and volume in pellet production, the Redmond facility is the logical move. Not only for logistical reasons, but also because it’s a facility with an expiring lease. The next lease end date for their pellet production isn’t until 2025 at their Rural Retreat, VA facility.
Possibly adding to overproduction of pellets for Traeger, they purchased their Tuscarora, NY facility in Q4 2020, during the height of the pandemic. This is their only owned plant, and it has the highest average production of all of Traeger’s facilities.