1 May 2013

300 jobs under review at Fonterra

9:41 pm on 1 May 2013

Fonterra's chief executive says a proposal to axe 300 jobs isn't for cost-cutting reasons, but rather a reallocation of resources.

Theo Spierings says a review of the dairy cooperative's support services has identified opportunities for centralising services and reducing duplication, saving $65 million a year.

Mr Spierings said on Wednesday the cuts would apply only to positions in its corporate offices in New Zealand and those staff are being consulted before a final decision is made.

Fonterra wants to reallocate resources to areas that make money, he said, and the cuts would allow its overseas branches to be more autonomous and less controlled by support staff in New Zealand.

Fifty of the targeted jobs are already vacant following a hiring freeze in February this year at Fonterra, which in April reported a 33% jump in half-year profits to $459 million.

Although the company is investing in growth, Mr Spierings said it had to ensure its people are working on the right things and that it is spending its capital on the right priorities.

Fonterra employs 17,000 people worldwide.

The national vice-chairman of dairy at Federated Farmers said shareholders want to know that money is being spent where it is needed and there is no doubling up.

Andrew Hoggard said restructuring like this isn't unusual and it's highly likely Fonterra will end up hiring a group of people in a growth area when the time comes.

Jacqueline Rowarth, a professor of agribusiness at Waikato University, said the move is no surprise, as Theo Spierings has indicated previously he could cut $90 million from the budget over three years.

Professor Rowarth said restructuring always costs more than paying salaries, so Fonterra won't profit in the immediate future - but when it does, the benefits would be significant.

She said the cuts don't affect dairy farmers, but many will be pleased to see fewer people on the payroll.