500 job losses as Arla restructures

By Jim Cornall contact

- Last updated on GMT

Arla will also change its current management structure
Arla will also change its current management structure

Related tags: Arla, Milk

Arla has announced structural changes to its organization that it says will enable the business to deliver on its Good Growth Strategy 2020.

As a result of the reorganization, Arla anticipates a reduction of up to 500 of its 7,000 monthly salary positions. It is likely that changes will be confirmed by mid-March. Hourly-salary roles in production and transport will not be affected by the changes.

“To ensure that we are on top of our game and fit to take advantage of the opportunities in the changing global dairy market we need to make these changes," ​said CEO Peder Tuborgh.

“It’s crucial that we create the best value for our owners in the extremely tough conditions. Unfortunately as we become more efficient and re-organize our business, this will mean that we are proposing that a significant number of roles will disappear.

“Our priority right now is those colleagues that will potentially be affected and we will be consulting with them as soon as possible. We will be providing our full support to those affected during this process.”

Peter Giørtz-Carlsen, who currently leads the UK market, will take on a new role as head of Europe and Tomas Pietrangeli, who currently heads up the Danish market, will succeed Giørtz-Carlsen in the UK from March, 1 2016.  

Doubling of organic revenue

Arla announced its Strategy 2020 in December 2015, setting out its aim to grow the business in eight global dairy categories and six market regions, as one effective and unified company.

Arla says it aims to double the organic revenue growth rate from its current 2% by 2020.

Giørtz-Carlsen said, “This strategic reorganization will allow our UK business to become more agile and responsive to the dynamic nature of the market.  We have strengthened the UK business significantly in 2015 with the growth of our own label and branded volumes in all dairy categories, launched the Arla brand and driven cost efficiencies.  

“We now need to take the next step which will be to structure our business to capture the full benefits of our global scale. At the same time, we will become even more commercially focused locally and deliver value to fuel our 2020 ambitions for our farmer owners and customers. It’s unfortunate that a number of roles will be impacted and we will work closely with our colleagues over the coming months to minimize the effect that these changes will have on our people.”

UK key part of strategy

Pietrangeli, said, “As Arla’s largest market, the UK is a key part of our organization with ambitious plans for the coming years. I’ll be focusing on championing our leadership role in the UK dairy industry as well as delivering the very best for our farmer owners, even during these challenging times.”

Tuborgh has assembled a new executive management team, which is built around specific functional areas and with commercial markets, organized into two geographical areas: Europe and International. This new team will reduce from nine to seven members with responsibilities as follows:

  • Peder Tuborgh, CEO and head of MMT (Milk, Members & Trading)
  • Povl Krogsgaard, vice-CEO and head of Global Supply Chain
  • Natalie Knight, CFO
  • Ola Arvidsson, HR & Corporate Affairs
  • Hanne Søndergaard, Marketing & Innovation
  • Peter Giørtz-Carlsen, Europe
  • Tim Ørting Jørgensen, International

Speed of the essence

Tuborgh said, “Arla has grown its business significantly in recent years both organically and through mergers. However, more milk is being produced globally, Europe is experiencing pressure on prices and very little growth, which means competition is fierce.”

“In addition, consumer needs are becoming more diverse and our customers expect increasing levels of service. Therefore, we need to be more agile and cost efficient to remain competitive. In order to remain at the very top of their preferred partners list it will be necessary to change the ways we work.

“As we have a huge task in 2016 to create profitable positions for extra 600m kg milk and protect Arla’s performance, I expect that we will have our full organisation in place as soon as possible without losing speed in the process.”

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