May 3, 2004

 

 

New Zealand's Fonterra to Cut Workforce 3.5% Over 2 Years

 

New Zealand's Fonterra Co-operative Group Ltd, the world's largest dairy products exporter, said on Monday it would scrap 700 jobs or 3.5 percent of its workforce in the next two years.

 

The restructuring will affect mainly New Zealand-based administrative roles, 30 of which will go in the next few weeks, Fonterra Chairman Henry van der Heyden said.

 

The job losses were part of a long term strategy rather than a direct response to issues such as the firmer kiwi dollar, which has cut returns to farmer shareholders, he said.

 

"As we centralised, like for example our head office into Auckland, that gives us the ability to take costs out around administration," van der Heyden told Radio New Zealand.

 

"This is within the long term strategy of Fonterra, this is really the reason why we put Fonterra together, it really makes us focus on efficiencies all the way down the value chain, all the way from cow through to customer."

 

Half of Fonterra's 20,000 employees work in New Zealand.

 

Fonterra was formed in 2001 through the merger of New Zealand's two main dairy companies, Kiwi Cooperative Dairies and New Zealand Dairy Group, and the export board they jointly controlled.

 

The group made a preliminary forecast in March that its payout to farmers would fall 16 percent to NZ$3.50 a kilogram of milksolids in the 2004/05 season.

 

The forecast reduced payout would cut farmers' incomes by a around NZ$780 million on the previous season and resulted largely from a 25 percent rise in the New Zealand dollar against the greenback over 2003.

 

However, the kiwi is now around 11 percent below its seven year peak of $0.71 reached in mid-February.

 

Fonterra, New Zealand's largest company, generates some 20 percent of the country's exports and seven percent of gross domestic product.

 

($1=NZ$1.59)