With the New Zealand Dollar going through a phase of depreciation, major exporting businesses, including Fonterra, are feeling the crunch it is imposing on their corporate profitability. Furthermore New Zealand based global milk giant Fonterra is also suffering from falling global prices for milk, due to an oversupply of milk on the world market. Subsequently they have recently revealed that restructuring processes will be made within their operations, involving changes in employment levels and manufacturing techniques.
The dairy co-operative sought external consultants advice within this review process, which concluded that hundreds of jobs would have to be axed in order for the company to maintain profitability. Global diary prices have fallen over nine times in a row, with dairy farmers payouts for the season decreasing rapidly. It has been forecasted that for the current season farmers will receive a $5.25 (per kilo) payout, which is far lower than $5.50 to $6.00, figures which analysts estimate are required for farmers to break even.
It is thought that around 523 jobs are going to be cut as part of this restructuring process. The company’s group director of co-operative affairs Miles Hurrell has stated that a majority of the redundancies will come from New Zealand and will be in areas such as HR, finance and information systems. They are hoping to save up to $60m a year through the job losses.
