A UK business unit of German dairy giant Müller is considering whether to transfer production of butter, potted cream and milkshakes from its plant in Gloucestershire as part of a cost-cutting drive.
Amid efforts by Müller Milk & Ingredients (MMI) to “stabilise the business”, the company is proposing to switch production of those products, including its Frijj brand, from its Severnside dairy to other sites under its Project Darwin initiative launched a year ago to cut costs and improve profitability in the UK and Ireland.
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The Severnside plant also manufactures private-label flavoured milk, bulk cream, fresh milk and powder but “compares unfavourably in terms of cost, complexity and utilisation with other dairies in MMI’s network”, the company said in a statement, adding those products will still be made at the site.
Rob Hutchison, the operations director at MMI, explained: “Whilst MMI has made significant progress in the past year, our business is still loss-making. We must maintain our momentum if we are to achieve sustainable profitability.
“Cost of production at Severnside is higher than any of our other sites and this review will look at how we can best meet the needs of our customers, in a manner that is much more simple and cost effective.”
The Müller group is privately-owned so therefore does not reveal details of its financial performance, including profits or losses at any of its business units.
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By GlobalDataA 45-day consultation period with employees will begin on 17 February as the business looks “to simplify and restructure operations at the site, to bring it into line with current and future customer requirements”.
MMI said it will seek to offer workers other opportunities within the business if the proposals go ahead, or will provide support to those that are not able to relocate.
“We are taking action to ensure we can achieve cost leadership in everything that we do, while meeting the requirements of our customers both now and in the future,” Hutchison said. “We understand that this is an unsettling time for our employees and will work hard with them and their representatives during this period to find the right solutions.”
Müller revealed last year it was reviewing the future of its sites in Scotland, with the Aberdeen dairy singled out for closure under Project Darwin, while in England, a dairy in Foston in the county of Derbyshire was set to be closed down. A spokesperson confirmed the company has followed through on those plans.
