Wiseman, which released a trading statement today warning that sustained increases in the price of diesel and HDPE* (used in plastic milk bottles), could “materially impact costs going forward”, said Okehampton would require significant investment to achieve the operating efficiencies attained at its other dairies.
A spokesman told FoodManufacture.co.uk: “Okehampton processes about 25m litres a year of niche products such as West Country Devon and Cornish milk, cream and clotted cream.
“If the decision is taken at the end of the consultation process to close the dairy, we will carry on making West Country milk at our Bridgwater dairy but would no longer be producing Devon or Cornish milk or clotted cream.”
Investment needed would be 'prohibitively high'
Okehampton, which was commissioned in 1997 and acquired by Wiseman in 2006 from Milk Link, was not as efficient as Wiseman's other sites, he claimed. “This is an issue of whether Okehampton is delivering on efficiency, performance and margin. Every dairy is challenged in these terms.”
Group operations director Martyn Mulcahy added: “We have to address the reality, which is that the cost of processing milk and the investment required at the site is prohibitively high in comparison to our other dairies in the UK."
While Wiseman’s business in Scotland continued to grow, it had lost some public contracts supplied via its depot at Cupar when they came up for re-tender, he said. “It is important that we match our facilities with our future operational requirements.”
John Gorle, National Officer at trade union Usdaw (Union of Shop, Distributive and Allied Workers) said the scale of the proposed changes had come as a shock, adding: "Consultations on a site by site basis will start shortly and we will examine Wiseman's business case for the proposals in detail.
“The company has said that limited opportunities for redeployment exist and that they will seek volunteers for redundancy, but at the moment compulsory redundancies certainly can't be ruled out."
Results in line with expectations
Separately, the firm today reported that turnover in the 17 weeks to January 22 had been in line with expectations, while profits for the year would be consistent with previous guidance.
It added: “We note calls from milk suppliers for an increase in the amount paid for raw milk and continue to seek to address this concern, as well as manage our own costs and margins.”