Over 500 jobs to go as Fonterra continues business review

Fonterra Co-operative has announced it will axe more than 500 jobs as it reviews its entire operation in a bid to improve profitability against a backdrop of plummeting milk prices.

Chief executive Theo Spierings said that 523 roles will be dissolved across its central procurement, finance, information services, human resources, strategy and legal teams.

The dairy processor expects the job losses to incur a one-off cost of NZ$12–15 million, but forecasts the ongoing payroll savings to be NZ$55–60 million p.a.

Spierings said the news had been “unsettling” for the people affected but the co-operative had to change if it was to remain strongly competitive in today’s global dairy market.

He said the co-operative’s leadership was developing initiatives to deliver value right across the organisation.

“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 NZ$5 million a year,” said Spierings.

The business 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.

The next stage of the review will consider “new business structures” in administration, sales — ingredients, consumer, marketing, research and development, communications, health and safety, food safety and quality, group resilience and risk, property, procurement and change management.