Fonterra cutting jobs as it strives to save $55m to $60m a year

Fonterra cutting jobs as it strives to save $55m to $60m a year

Fonterra is axing 523 jobs as part of a "business review" the dairy co-operative says will save $55 million to $60 million a year.

The co-operative, which has more than 18,500 global staff, says the staff cuts will come at a one-off cost of $12 million to $15 million.

The affected staff will start leaving in September.

Chief executive Theo Spierings says the news had been unsettling for the people affected but the co-operative 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 says.

The cuts have been announced as Fonterra’s updated its previously outlined business review.

Fonterra announced on July 2 that it had begun consulting staff on proposals to streamline its business structures. It said the first group of staff it had started talking to, worked in its procurement, finance, information services, human resources, strategy and legal departments.

It said, “Other parts of the business will follow in coming months”.

Today it’s announced that on August 5 it will start consulting with staff in administration roles, sales, consumer, marketing, research and development, communications, health and safety, food safety and quality, group resilience and risk, property, procurement and change management.

Fonterra won't provide further details on how the rest of the review will pan out.

Spierings says, “The key aims of the review are to ensure that the Co-operative is best placed to successfully deliver its strategy, increase focus on generating cash flow, and implement specific, sustainable measures for enhancing efficiency.

“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.

News of Fonterra’s staff cuts comes following another disastrous GlobalDairyTrade auction overnight, when prices fell 10.7% - the ninth consecutive fall and the biggest drop in over 12 months. Prices are now at 13-year lows. 

Fonterra’s share price has dropped nearly 5 cents, or 1.1% over the day, to $4.72 (as at 3pm).

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they should start at the head someone was alseep at the wheel and needs to be on their way

Don't be too harsh - after all - where would farmers be today without his free milk in schools program?

Chickens coming home to roost !

Cost NZD$105,162 per job using $55m and 523 employees.

You're reading it wrong.
The cost savings will be largely from enhancing efficiency. The cost saving is not reported to be solely from wages.

"The staff cuts will come at a one-off cost of $12 million to $15 million"
Redundancy payments?

removing some of the "farm advice, research and paper chasing roles"
More a case of realigning with core business at this stage. why have herds of salespeople if the market isn't buying.

15M in cost = about av 23k in handoffs.
The rest is from areas closing down that won't need support/funding.

No more Fonterra Sky broadcasts etc
reduced support for feilddays. Taxpayer might have to front some dollars for community milk to feed hungry children in the morning.

But how many jobs in total will really be cut and what will the total savings be once those additional sales and marketing staff are hired:
"What I do know is that we need much less support function and more people selling and producing stuff.

"So in one area we'll see more people in sales and production based on our growth strategy and less people in a support function."

Fonterra has 17,000 employees. 2500 on over 100 k a year, 17 on over a million bucks. Almost three employees to every dairy farm.

Completely silly 'comparison'. Most of their employees are offshore involved with things unrelated to NZ dairy farms. That is like saying GM's 216,000 employees are related only to their US operations. 78% of GM's sales happen outside the US. For Fonterra, the number is probably something similar.

Also, read the story before commenting. They have 18,500 employees. (Using Wikipedia as a source is sophomoric ...)

Not silly at all.
They don't add the value add they should, as proven by the NZ payout and the dividend.

Apart from that David, is much of your comment constructive?? hmmm

Supplying shareholders then David

Supplying shareholders then David. Is that more agreeable than farmer owners?

So do Fonterra produce anything outside of New Zealand? Can't say I know, but if not then the New Zealand operations carry all of them.

What is GM's debt per employee?

Andrew was probably counting Theo and John as being worth 749 employees each considering they would pick up a cheque each week to a similar value as 749 employees??

and their annual is more than the total value of many farms _farms_, not just the 2-4% yield (before int & cap ex)

Does anyone still think that the 'dairy auction' idea was a good one. It would be great to hear someone try to explain why.

Dairy Auction to meet global demand. Excess supplies held by china of milk powder is not helping the global demand.

powder they bought when the market was much higher???

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