The changes are the first in a series of actions as part of its three-year transformation program, Calcium.
Cheese production restructuring
One of the requirements to achieve this is the streamlining of the company’s corporate operations and support functions, Arla said.
This process has now begun, starting with global functions such as finance, legal & IT, corporate strategy, member relations, HR & corporate affairs.
CEO of Arla Foods, Peder Tuborgh, said, “We want to achieve the goal of building a stronger, more competitive Arla, which serves our customers and consumers better and provides higher returns to our farmer owners and that requires us to make tough decisions.
“In order for Arla to continue to deliver on our Good Growth 2020 strategy that brings innovative dairy products to millions of consumers around the world, we must become one of the most agile and frontline-obsessed companies in today’s fast-paced and complex global food industry.”
As a result of the changes, 195 positions are expected to be made redundant across the affected corporate support functions. The impact is predominantly at the company’s head office in Aarhus, Denmark, however with smaller numbers of positions affected at the company’s administrative offices elsewhere in Europe.
In the UK, Arla said there is an opportunity to diversify its cheese production as well as improve efficiencies by consolidating operations across its production and packing sites, where it currently has capacity that is not currently being fully utilized.
Arla said it will cease production at its Llandyrnog creamery while potential opportunities for the production of other products at this site are explored further.
Under the proposals current cheddar cheese volumes would move to its Taw Valley and Lockerbie creameries. In addition, Arla is proposing the integration of all its cheddar cheese packing lines into its Oswestry packing facility, which would result in the closure of its smaller Malpas and Lockerbie packing operations.
The proposed consolidation, subject to the completion of the consultation process, could put 154 roles at risk of redundancy at Llandyrnog, Malpas and Lockerbie.
If the plans proceed, Arla said it is looking to recruit colleagues into vacant positions within their site network and will set up links with local job centers, launch career fairs and provide outplacement support as well as working with other local food producers to find suitable vacancies.
Arla said it does not anticipate any impact on its supply of Welsh milk and will endeavor to produce its current portfolio of cheeses dependent on demand from its retail or foodservice customers.
Tomas Pietrangeli, managing director, Arla Foods UK, said, the proposal enables Arla to not only drive efficiencies but also retain ample capacity to better meet the evolving needs of customers in areas such as retail, foodservice and export.
“It’s also critical that we retain our approach to innovation and never compromising quality in our cheese business and we feel that these steps are the best to take to ensure our sustainability,” Pietrangeli said.
Arla has also been reviewing its options to rebalance its logistics warehouse network and considering whether it is making the most efficient use of its own resources, as well as the way it works with third party providers.
It said it could potentially transfer some existing Arla volume, which is currently serviced across its network and by its business partners, into its National Distribution Centre at Stourton in Leeds.
At its head office in Leeds, 15 jobs in corporate support functions are also at risk.
Pietrangeli said the company hopes to minimize any potential impact on those affected, but added, “We will be continuously looking at ways in which we can transform our business to ultimately secure the best returns from our farmer owners.”
With the Calcium program still in its early stages, the cooperative said it is too early to disclose the total number of jobs that will be added or removed by the ongoing work, however the company expects the net number of positions to be lower.