Dutch dairy cooperative FrieslandCampina is to close a site in Germany as part of a “comprehensive reorientation” of its operations in the country.
The closure of the plant in Gütersloh will affect 231 employees.
FrieslandCampina said its restructuring efforts should result in restoring profitability in Germany within three years.
The company said the closing of the site in Gütersloh is a consequence of overcapacities in the fragmented German market and of years of loss-making production of private-label desserts that make up the major part of the the facility’s volumes.
This category will be discontinued, while other product lines will be transferred to the plants in Cologne and Heilbronn in Germany, as well as a factory in Maasdam in the Netherlands.
Some 74 employees, from Heilbronn and Cologne, will be affected by the transfer.
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By GlobalDataFrieslandCampina said the impact of the closing of the site on the available processing capacity of the co-op will be “negligible”. The planned closure is scheduled for March 2019.
Jan Kruise, managing director of FrieslandCampina’s German arm, said: “This was a tough decision to make but previous attempts to fix the problems have failed and after careful consideration of alternative solutions the continued loss-making situation unfortunately has left us no other choice.
“We will of course very shortly enter into consultation with the employee representatives and we will do everything that is within our power to help the affected employees find new jobs.”
Central to the company’s refocus are investments in FrieslandCampina core brands, such as Landliebe, Tuffi and Frico, a bundling of its commercial activities in the Düsseldorf area and other measures to improve profitability.
Kruise said: “The German market for dairy products is fragmented and characterised by fierce competition due to overcapacities. We are convinced we will be able to master these challenges by focusing on our strong brands and through strictly consumer-oriented management of our product portfolio.
“We are the only company with a substantial presence in all dairy categories and channels, and we will benefit from this competitive advantage by proving ourselves a preferred partner in the market in accordance with our strategy.
“In order to achieve our ambitious goals we will invest in our business and we will not shy away from difficult decisions that will open up the path to a successful future for the long term. We are here to stay.”
North Rhine-Westphalia (NRW), where Dusseldorf is located, has historically been a key region for FrieslandCampina. Many member farmers are based there and Tuffi is a strong local brand.
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