Sector News

FrieslandCampina restructuring leads to German plant closure

November 24, 2017
Food & Drink

FrieslandCampina is shutting the doors of a German dairy plant with job losses on the cards as part of a restructuring initiative.

Branding the move a “comprehensive reorientation in the German market today” and “making a fresh start in Germany, the Dutch dairy giant said that central to the strategic refocus are considerable investments in its core brands, such as Landliebe, Tuffi and Frico, a bundling of its commercial activities in the Düsseldorf area and other measures to improve profitability.

The site closure follows overcapacity in Germany and several years of losses involving the private label desserts produced at the Gütersloh plant.

This category will be discontinued, while other product lines will be transferred to the plants in Cologne, Heilbronn and Maasdam in the Netherlands. Gütersloh processes German milk.

The impact of the closing of the site on the available processing capacity of FrieslandCampina will be negligible, says the company, and the planned closure of production in Gütersloh is scheduled for March 2019.

The closure will affect 231 employees, according to FrieslandCampina which expects to restore profitability within three years.

Jan Kruise, Managing Director of FrieslandCampina Germany explains how the German market for dairy products is fragmented and characterized by fierce competition due to overcapacities. He stresses the company will not “shy away from difficult decisions” in order to secure its long-term position.

“This was a tough decision to make, but previous attempts to fix the problems have failed and after careful consideration of alternative solutions the continued loss-making situation, unfortunately, has left us no other choice. We will of course very shortly enter into consultation with the employee representatives and we will do everything that is within our power to help the affected employees find new jobs.”

“We are convinced we will be able to master these challenges by focusing on our strong brands and through strictly consumer-oriented management of our product portfolio,” he said.

“We are the only company with a substantial presence in all dairy categories and channels and we will benefit from this competitive advantage by proving ourselves a preferred partner in the market in accordance with our strategy.”

“In order to achieve our ambitious goals we will invest in our business and we will not shy away from difficult decisions that will open up the path to a successful future for the long term. We are here to stay.”

North Rhine-Westphalia (NRW) has historically been a key region for FrieslandCampina with many member farmers based there. Tuffi is also a strong local brand.

Kruise adds that by relocating and consolidating commercial functions to the Düsseldorf area, FrieslandCampina expects to benefit from the strong talent base in the area and to drive the Germany strategy more effectively.

NRW is an important center of consumer product and food industries. The affected commercial employees from Heilbronn and Cologne, totaling 74, will learn more about the opportunities at the new location in the context of the talks with the Works Council which are due to start very shortly.

The transfer is scheduled for the second quarter of next year and the employees have been informed about the plans.The plants in Heilbronn, Cologne and Schefflenz as well as their workforce numbering 366, 326 and 23 respectively, will not be affected by the intended move.

Source: Food Ingredients First

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