Friday, March 29, 2024

Everything under review as Fonterra talks to staff

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Fonterra has begun consultation with workers on proposals to streamline its business structures, which chief executive Theo Spierings has said will lead to job cuts.
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Consultation began with the procurement, finance, information services, human resources, strategy and legal functions and mass meetings of staff were held in Hamilton and other centres.

Other parts of the business would follow in coming months, Spierings said.

In June, after FW revealed McKinsey and Co had been reviewing Fonterra, Spierings said hundreds of jobs would go from support services.

However, he wanted to appoint more sales and marketing staff in export markets.

“We need more people driving the top line in market so selling, actually rolling up their sleeves and selling.

“In support and group functions we need less so it’s a shift of people and capabilities that will have some consequences but that is what I mean by trimming the sails.” 

A follow-up statement last week said the purpose of the wide-ranging business review was to ensure Fonterra was best placed to respond to a rapidly changing global environment. 

The initial phases had looked at the entire business in detail and identified potential areas, including significant initiatives in procurement, business operations and working capital, where the company could unlock increased value for its owners.

Those opportunities were now being built into defined plans that would drive further improvement across the business, allow Fonterra to fund its growth strategy and deliver stronger results. 

“We have the right strategy and the long-term future of dairy is sound, however, the world is changing and global dairy markets are increasingly volatile. 

“To keep ahead of the game, we need to be more agile, reduce costs and generate value,” he said. 

Fonterra would make a further statement after the consultation phase, towards the end of July.

A spokesman said the business review and impact on jobs would not detrimentally affect Fonterra’s capacity to receive and process all milk at the peak of the season.

Did it then follow that job cuts would be confined to support staff members, not production people?

“Everything is in scope. 

“We are looking at the entire business in detail, identifying significant initiatives in procurement, business operations and working capital where increased value can be unlocked.”

Federated Farmers dairy section chairman Andrew Hoggard said he hoped the business review and job losses were not a knee-jerk reaction to low prices.

“Has the market really changed that much or is this just part of the cycle? I'm just a bit worried there might be an over-reaction.

"I would hope that we're not sacrificing long-term benefit for a bit of short term easing of the pain. 

“If we're cutting off a bunch of staff to save 1c a kg MS but in the long-term those people might have added 5c?

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