‘Urgent necessity’ prompts wholesale business shake-up for DMK

By Ben Bouckley

- Last updated on GMT

The Strückhausen site in Germany is one of two earmarked for closure as DMK plans to restructure operations
The Strückhausen site in Germany is one of two earmarked for closure as DMK plans to restructure operations

Related tags Milk

Germany’s largest dairy processor Deutches Milchkontor (DMK) has unveiled radical plans to restructure production across its 20 sites in the country as part of an urgent strategy to ensure long-term ‘cost leadership’.

The co-operative’s operations director, Sönke Voss, said: “When the merger [between Humana Milckindustrie and Nordmilch in May] took place it was foreseeable that there would have to be changes to the production site structure of 20 factories with more than 50 production departments, some very similar.”

As such, Voss said it was a matter of “urgent necessity”​ for DMK (which turns over around €4bn and employs 5,657 staff) to “bundle production competences and adapt the site structure to future developments in milk volume in order to secure cost leadership”.

Voss added that this was the only means by which DMK would be able to maintain its market position in a “fiercely contested” ​global dairy market, and also guarantee its shareholders (farmers) competitive milk prices in the long term.

Better milk utilisation

The company said its Business Affairs Committee – comprising employee and management representatives – would examine the restructure plans further, with a final decision expected by the end of 2011.

With specific changes yet to be finalised following an initial management board presentation of restructure plans to the committee last Wednesday, DMK nonetheless said it envisages changes across 10 of its 20 current sites.

A number of production departments relating to dairy products (including UHT milk, curd (quark) and drinks) would be relocated to other factories, the company said.

DMK added that it planned to close its Strückhausen factory (pictured) and its Milchhof Magdeburg subsidiary due to better milk utilisation at adjacent sites, and insufficient regional milk volumes in the case of the latter.

Together these factories employ 115 staff, and DMK said the closures, combined with internal site relocation measures, meant that around 156 jobs in total could be affected by the restructure.

Talks with the sites’ employee representatives and all others concerned will commence as soon as the concept has been approved by the Supervisory Board. DMK will endeavour to find socially-compatible solutions for employees who may be affected,”​ the company said in a statement.

Cross-border force combination

Discussing general advantages of the planned restructure, DMK added: “The new concept will further improve the company’s cost efficiency. The plan is to bundle production competences in order to secure cost leadership and therefore competitiveness in the long term.”

On October 17 DMK also announced plans to merge with Dutch cheese producer Drent-Overijsselse Coöperatie Kass (DOC Kass), with DMK management spokesman Josef Schwaiger again underlining the EU dairy consolidation trend​.

Schwaiger said: “Against the background of consolidation in the European dairy industry, it is more important than ever before to combine forces across national borders in order to open up key non-European markets.”

DMK stable includes fresh yogurt products such as milk, yogurt and curd, cheese, baby food, ice cream, health products and milk-based ingredients for food firms.

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