Arla Foods has announced the first stages of their overall €400m cost reduction programme ‘Calcium’ that will run over the next three years.
The strategic review includes creating a reorganised cheese business to focus on meeting existing and new customer requirements as well as to support its fast-growing brand and channel strategies.
It will also be creating a logistics network that is able to move volume around more effectively to continuously improve its service levels as well as reducing the size of its corporate functions to ensure front line obsession in its commercial areas.
As part of the review, Arla is proposing to cease production at its Llandyrnog creamery while potential opportunities for the production of other products at this site are explored further. Under the proposals current cheddar cheese volumes would move to its Taw Valley and Lockerbie creameries.
Arla is also proposing the integration of all its cheddar cheese packing lines into its Oswestry packing facility, which would result in the closure of its smaller Malpas and Lockerbie packing operations.
The proposed consolidation, subject to the completion of the consultation process, could put 154 roles at risk of redundancy across Llandyrnog, Malpas and Lockerbie.
Tomas Pietrangeli, managing director, Arla Foods UK, said: “This proposal enables us to not only drive efficiencies but also retain ample capacity to better meet the evolving needs of our customers in areas such as retail, foodservice and export.It’s also critical that we retain our approach to innovation and never compromising quality in our cheese business and we feel that these steps are the best to take to ensure our sustainability.”
NFU dairy board chairman Michael Oakes said: “Arla has announced the first stages of their overall €400m cost reduction programme, Calcium, that will run over the next three years. It impacts on three of their UK processing sites and a number of UK staff, both in processing and support roles. We understand, from initial discussions with Arla, that there will be no negative impact on Arla members supplying the Llandyrnog site in North Wales, as they remain full Arla members and their milk will continue to be collected and processed as normal. Clearly our thoughts at this time are with those Arla employees who have lost their jobs as a result of this strategic review.
“While driven by the clear need to be more cost-efficient duet to low market returns over recent years, the impact of currency fluctuations on the EU business and escalating costs, Arla are confident that the majority of the savings made will be returned to their owners, Arla dairy farmers.”