An update by chief executive Theo Spierings on the business review said the one-off costs of the job cuts would be $12-$15 million and the annual savings thereafter $55-$60m.
Group co-operative affairs director Miles Hurrell confirmed operational staff members in more than 30 NZ manufacturing sites had not been part of the first phase of business restructuring.
He was not able to say what proportion of the total NZ staff was therefore exempt.
Earlier a spokesman said Fonterra’s ability to process all the milk supplied over the season peak and its options to manufacture what the markets wanted would not be compromised by the job cuts.
Hurrell said people whose roles were being axed would be encouraged to apply for any vacancies and that in a company of Fonterra’s size and complexity recruitment was continuous.
Spierings’ announcement said the review would move on to administration roles, ingredients and consumer sales, marketing, research and development, communications, health and safety, food safety and quality, group resilience and risk, property and change management.
“Reducing the number of roles in our business isn’t about individual competency; it is about continually improving the way we deliver performance.”
Theo Spierings
Fonterra
He emphasised job cutting was not the only objective.
“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 included measures to improve profitability at Fonterra’s Australian business and aimed to remove barriers across the organisation to enable it to unlock more value.
“Reducing the number of roles in our business isn’t about individual competency; it is about continually improving the way we deliver performance,” Spierings said.
Hurrell said the business needed to become leaner and be prepared for the market situation it found itself in now.
Federated Farmers dairy section chairman Andrew Hoggard hoped the job cuts were not a knee-jerk reaction as dairy prices continued to fall.
The company had a history of getting rid of people with institutional knowledge then two years later hiring again, taking on graduates who couldn’t do as good a job.
The top management people who had made big changes in policy and new investments should now be on notice.
If those decisions didn’t pay off in the next couple of years heads should roll.
Hurrell said he could assure farmers the job cuts were not a knee-jerk reaction but part of the wider business review and implementation of the company strategy.
