Australian co-operative Dairy Farmers has today (Monday) announced changes to its manufacturing, supply chain and distribution capabilities which it says will lead to a cost base reduction of A$42m (US$32.5m) a year.
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“Dairy Farmers will invest $24m within the next 18 months to centralise and improve its capabilities around the country, backing its commitment to regional Australia,” said chief executive Rob Gordon. “To have a strong, growing and viable business, we must maximise our economies of scale, improve our efficiencies and concentrate our processing capabilities closer to market to reduce unnecessary freight and other logistics costs for raw milk and finished goods.”
“We will continue to take all of our farmers’ milk but will use it more effectively and wisely,” he said.
After this restructuring, Dairy Farmers will operate a total of eleven manufacturing sites around Australia, down from 14 sites, continuing three operations in New South Wales, three in Victoria, three in Queensland and two in South Australia.
Total employee numbers will reduce by 460 including unfilled vacancies, representing a 20% reduction in the Dairy Farmers’ workforce and, as part of the changes, where possible, it will redeploy people within its network. For example, the restructuring involves 27 new roles at its Jervois plant in South Australia and 9 new roles at its Lidcombe site.
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By GlobalDataBy March 2006, Dairy Farmers will close two of its milk factories, one at Bomaderry in NSW as well as its UHT production plant at Mount Gambier in South Australia. It will also close its milk intake facility at Deniliquin in NSW by December 2005. By March 2006, manufacturing operations at Toowoomba in South East Queensland will be substantially resized and facilities at Hexham in NSW will be reconfigured.
Dairy Farmers will also move to a streamlined, self-managed distribution centre network in NSW, part of which includes a more efficient, centralised product picking system at its strategic site at Lidcombe.
“Such change is difficult for many of our people which is why we are working closely with our employees and unions to provide all the necessary support and assistance as the required changes are implemented,” Gordon said. “We will ensure that all affected employees receive full entitlements, outplacement and retraining.”
“Any decision that results in job losses is never taken lightly but the changes we are announcing today are vital in the current global competitive environment if we’re to meet our obligations as a co-operative and sustain a strong and viable business,” he said.
