Arla Foods has announced it is to close its Kißlegg production plant in southern Germany as the facility is "not economically viable", a decision that sees 38 jobs put at risk.
The plant, located in the German district of Ravensburg, produces hard cheese brand MonRocco, which has seen a "fall in demand", the company said.
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"Over the past three years, competition has intensified dramatically. In Eastern Europe in particular, MonRocco can be produced much more cheaply than is possible at the Kißlegg site,” said Winfried Meier, senior vice president for Arla's business in central Europe. "Recently, opportunities to sell this product and still cover costs have been severely restricted."
Arla said the decision comes in response to a "massive fall in prices and strong pressure from competition in international markets". The site will close on 29 February.
"This was not an easy decision to take," said Meier. "In recent months our experts have carefully examined and worked through a variety of options. Unfortunately it became clear that continued operation of the Kißlegg site was not economically viable."
Meier said the workers would have the opportunity to apply for one of 19 jobs Arla is offering to employees mainly further east in the Allgäu area, where the company has alternative sites, but also at other locations.
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By GlobalData"For us, the Allgäu is an important area for Arla Foods and therefore the Bad Wörishofen, Sonthofen and Wertach sites will be better used in future," Meier said. "The aim is to run these sites at full capacity so as to improve and support the marketing of special milk."
Arla also announced that from early next year it would be reintroducing local brand Allgäuland to shops. The initial line will include milk and a few other soft cheese and butter products.
