By bringing together three of the most prominent names in the meat business in a collaboration aimed at safeguarding and developing the sector in the North of Scotland, this landmark agreement signals a new era for the Scottish meat processing industry.
As well as consolidating the SPM and Mathers businesses, a new state-of-the-art meat processing facility is planned for the Thainstone Agricultural Centre, near Inverurie, the headquarters of the ANM Group, the parent company of SPM.
The newly created enterprise will be led by Robbie Galloway, managing director of JW Galloway, which owns Scotbeef and Vivers, supported by ANM Group chief executive Pat Machray OBE, and with Mathers' managing director, Michael Mountford in the on-going role of site director.
Based on the business model of Scotbeef's successful processing facility at Bridge of Allan, near Stirling, the new Thainstone development will provide primary processing services for farmers, retailers, export, independent butchers and other customers.
The aim is for the new facility to be the most energy efficient of its kind in Europe, while removing the current processing operations from what has become a residential area of Inverurie.
The new company will initially run the current SPM and Mathers operations in tandem before they are consolidated at North Street, Inverurie, to maximise efficiency. A period of consultation with the 230 employees at both companies will be carried out. The intention is to retain as many of the positions as possible, however it is likely that there will be some job losses.
Robbie Galloway said: "These are extremely challenging times for the meat processing industry in Scotland with the twin pressures of a shortage of raw materials and the continuous price pressure from customers.
"To ensure sustainable business, efficient facilities are now a prerequisite," he said. "The interim consolidation of SPM and Mathers, which we will oversee, into one facility at Inverurie, followed by the relocation of the business to a new state-of-the-art facility at Thainstone will provide that and a platform for future growth.
"This will need to involve assistance from the public sector, significant efforts from all concerned and no little pain in the short ter," he warned. "We are committed to a viable and long term business in the North-east and will work hard to deliver that."
Mr Machray commented: "This is a groundbreaking agreement to safeguard the traditional agriculture industry in this part of the world.
"It has been roundly accepted that the current market for meat processing in the North-east is simply untenable and we have a responsibility to our members to move swiftly, addressing the issues at hand and making bold decisions to protect their businesses and a vital component of the Scottish economy. Half measures will only delay the inevitable, with an immeasurable and lasting impact on both the industry and the region.
"While tough decisions lie ahead of us all, the enormous significance and importance of this new partnership cannot be understated – this agreement should secure the long term future for meat processing in the North-east while maintaining a highly competitive market, benefitting farmers, customers and the local economy as a whole."
Mathers' Mr Mountford added: "Our shared vision for this new formed partnership is to secure the future of the meat processing industry in Scotland.
"We very much look forward to working with Ian and Robbie Galloway and Pat and I believe that the wealth of experience from all parties will lead to a promising future for all concerned."
The new partnership was welcomed by Scottish Government's Cabinet Secretary for Rural Affairs Richard Lochhead, who said: "I am delighted to hear about these welcome plans to secure meat processing at Thainstone which I'm sure will be good news for farmers and the wider community. The three businesses involved should be commended for their strategic vision. The Scottish Government will work with the companies to support this development over the next few years."
Speaking for Quality Meat Scotland, chairman Jim McLaren said: "This is tremendous news which sends a positive message to all those involved in the Scottish red meat industry.
"Without question our processors have been experiencing a period of turbulence and it is vital our industry continues to be forward looking and seizes opportunities to increase its efficiency and sustainability."
NFU Scotland president Nigel Miller added: "It was vital to producers in the North-east that the area retained an outlet to sell and promote its premium and iconic red meat brands and this is an exciting development.
"This is a partnership that brings together companies with a proven track record in the Scottish livestock and meat sectors and looks ideally suited to tackle the huge challenges that our processing sector continues to face.
"It heralds a route to ensuring that the long tradition of meat processing continues in Inverurie and delivers real value and confidence to all those involved in producing quality beef and lamb in the area."
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