Fonterra has announced it will be closing its specialist cheese plant north of Wellington. The plant, which produces Kāpiti products, employs 70 staff, but Fonterra CEO Miles Hurrell says it is not yet clear how many job cuts there will be.

Hurrell said staff were told about the restructure this morning. The operation is to move to the company’s Eltham, Taranaki cheese plant, where 35 more jobs will be created.

Hurrell also said there were likely to be more job cuts across the business, most likely among senior roles. The changes come as part of a major shake-up of the business.

Fonterra confirmed this morning a net loss of $605 million for the July year, slightly better than expected, on asset writedowns of $826m, mainly on its offshore businesses.

This is the worst loss the company has ever reported, far exceeding the $196m posted last year. Hurrell said that 2019 was incredibly tough for the co-op but it was also the year Fonterra made decisions to set it up for the future. The company has announced widespread plans to clean its house and turn the business around.

“These included us reflecting changing realities in asset values and future earnings, lifting our financial discipline, getting clear on why we exist and completing a strategy review,” Hurrell said in a statement earlier today.

Many of these calls were painful, but they were needed to reset our business and achieve success in the future. “We made the decision to reduce the carrying value of several of our assets and take account of one-off accounting adjustments.”

Kāpiti Coast Mayor K Gurunathan said Fonterra’s decision to close its Te Roto factory was a blow for the region but Kāpiti’s local economy is strong and growing, and can absorb the loss.

“Our first priority is ensuring our people are supported. “Where there are redundancies, we have confidence that Fonterra’s priority is looking after its people and, where possible we will support them in that.

“I’ve already spoken this morning to Fonterra about working together to explore options for ensuring that the Kāpiti Coast continues to benefit from the brand that borrows its name and inspiration from our home.

“We are a small provincial district within the Wellington Region, but our economy is in good health and our push to diversify has strengthened our resilience in managing challenges like this that are outside of our control.”

The changes announced by Hurrell include an organisational restructure to enable the cooperative to deliver its new business strategy.

It would move from two large central businesses, ingredients and consumer and food service, to three in-market sales and marketing units that would be close to customers. Called APAC for Asia Pacific, Greater China and AMENA covering Africa, Middle East, Europe, North Asia and the Americas, the new units would be led by a new team working under the office of the chief operating officer.

Commenting on Fonterra’s new strategy, Hurrell said the aim was to unlock value focus on three goals – “healthy people, healthy environment and healthy business”.

Fonterra has dropped ambitions to be a global dairy giant sourcing milk from around the world in a new business strategy which dictates “less is more”.

Source: NZ Herald

Featured Image: Fonterra Chairman John Monaghan, CEO Miles Hurrell and CFO Marc Rivers front the media over the latest $605m loss. Photo / NZ Herald

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