23 Jul 2014

Fonterra looking to cut jobs in Waikato

9:49 pm on 23 July 2014

Fonterra has acknowledged that last year's botulism scare is among the reasons production has dropped at its packaging plant in Waikato.

The dairy giant has told the 330 workers at the Canpac plant in Hamilton that it intends to run the plant 24 hours a day for five days a week, not the current seven.

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Some 110 positions are in doubt after a review by the company. Fonterra said on Wednesday that volume coming out of the plant has been dropping for years and has been below capacity for the past 12 months.

Its director of New Zealand operations, Robert Spurway, told Radio New Zealand's Checkpoint programme the botulism scare, which sparked product recalls of infant formula worldwide, is one of a range of reasons affecting production.

"We have lost some volume associated with the cancellation of the Danone contract, which was specifically related to the precautionary WPC 80 recall."

Mr Spurway said the current 24 production lines would be reduced, but won't say by how many. He said Fonterra is is proposing to resize the operation to focus more on paediatric nutritionals, such as infant and toddler formulas.

Baby formula was pulled off supermarket shelves last year after suspected contamination of the product.

Baby formula was pulled off supermarket shelves last year after suspected contamination of the product. Photo: AFP

Mr Spurway said a consultation period with staff and unions has started. "Within about two weeks we'll be in a position to confirm the proposal and any changes to it, and then we'd implement the changes following that."

He said the company would do its best to find jobs for workers at its other plants in the North Island region, where 2000 peple are employed.

"This will be a blow for our people and we will do everything we can to work with them to find new opportunities at our other sites in the Waikato and further afield should they need them.

"As we move into the start of our busy milk processing season, we will have more job opportunities at our other sites and we will aim to fill (them) with those impacted at Canpac," he said.

"We are continuing looking at where we can further invest in the Waikato, but have to make decisions based on what aligns with Fonterra's strategy and will drive the greatest returns to our farmer-shareholders."

Union spokesperson Myles Leeson from the EPMU said workers had an inkling that changes were coming, but Wednesday's announcement still came as a shock. He said workers are upset because it's not a good time, especially in the regions, to find new employment.

'Too much' reliance on China

Unions blame the botulism scare and relying too heavily on dairy exports to China for the move to cut jobs.

Chris Flatt from the Dairy Workers Union said the industry is very volatile and export markets are susceptible to events such as the botulism scare.

"(It) probably wouldn't have helped in terms of orders. There's been obviously a downturn in orders that Fonterra Canpac deal with, and then there's new requirements in terms of certification by the Chinese in terms of their regulation. It must have had some impact as well."

Mr Flatt said increasing competition from overseas companies setting up in New Zealand is also having an effect.

EPMU national secretary Bill Newson said relying on exports to China as the primary driver in the economy has come unstuck.

"What we're arguing as a union is not that we can keep every single job free - but that we should have an ongoing Government-led strategy for creating high-value jobs and a pathway into high-value jobs that people can go to."

Mr Newson said it is a case of putting too many eggs into one basket.

Pot shots at Parliament

David Cunliffe.

David Cunliffe. Photo: RNZ / Diego Opatowski

Labour Party leader David Cunliffe says Prime Minister John Key is trying to brush off job losses the Waikato plant.

In Parliament on Wednesday, both sides of the House took pot shots at each other over whether the regions have been doing better under a National Government.

Mr Cunliffe asked Mr Key what he would say to the more than 100 Fonterra workers told they are losing their jobs.

"Or is he now a little bit sorry that he's got a so-called rock star economy where the bottom's fallen out of the dairy market by a third in just six months."

Mr Key replied that 14,000 more people had jobs in Waikato under National, and expected that Fonterra would be trying hard to find replacement jobs for those workers.