Providing an update on its business review, Fonterra Co-operative Group Ltd has announced the reduction of 523 roles as one of its measures to improve profitability.
Chief Executive Theo Spierings said the company’s leadership was developing initiatives to deliver value right across the organisation.
“The key aims of the review are to ensure that the cooperative is best placed to successfully deliver its strategy, increase focus on generating cashflow and implement specific, sustainable measures for enhancing efficiency,” he said.
“A simple example already identified by our supply chain team is a logistics solution that increases the utilisation of export containers leaving our distribution centres, saving up to $5 million a year.”
The review includes measures to improve profitability at Fonterra’s Australian business as well as a series of additional measures to remove barriers across the organisation to enable it to unlock more value.
Fonterra confirmed that it had completed consultation with its central procurement, finance, information services, human resources, strategy and legal teams. As a result, 523 roles will be disestablished at a one-off cost of $12-$15 million. At that level, the company expected ongoing payroll savings of approximately $55-$60 million per annum.
Mr Spierings said the news had been unsettling for the people affected but the cooperative had to change if it was to remain competitive in today’s global dairy market.
“Reducing the number of roles in our business isn’t about individual competency, it is about continually improving the way we deliver performance,” he said.
Fonterra said affected staff would begin to leave the cooperative in September.
The company has also informed staff that, on August 5, it will begin consultation on new business structures with its people in administration roles, sales – ingredients, consumer, marketing, R&D, communications, health and safety, food safety and quality, group resilience and risk, property, procurement and change management.
Further updates will be provided in due course.