New Zealand-based Fonterra announced plans earlier today to reduce operating hours at Canpac, its second largest milk powder packing plant, from 24-hours, seven days a week to 24-hours a day, Monday to Friday.
The New Zealand Dairy Workers Union (NZDWU) has claimed that 114 of the plant's 330 current employees face being made redundant as a result of the proposed change.
Commenting, Fonterra's director of New Zealand operations, Robert Spurway, said the move will make the under-capacity facility "run more efficiently" and "better align" Canpac with Fonterra's paediatric nutrition strategy.
Speaking with Radio New Zealand, Spurway said this reduction of around a third reflect the Canpac plant's current workload.
He also acknowledged that the August 2013 botulism scare, which resulted in customer Danone terminating its contact with Fonterra, played a part in the the drop in production at Canpac.
"Running below capacity"
“We’ve seen a reduction in volume over a number of years, and certainly for the last twelve months Canpac has been running below capacity.”
“There is a range of reasons why we've been running below," he said.
"We lost come volume associated with the cancellation of the Danone contract, which was specifically related to the precautionary WPC80 recall."
Danone businesses Nutricia ANZ and Dumex pulled thousands of tins of infant formula from shelves in New Zealand, Cambodia, Thailand, Hong Kong, China, Malaysia and Singapore on the back of a Fonterra alert that three batches of WPC potentially contaminated with botulism-causing Clostridium botulinum had entered the supply chain.
Tests later revealed that the bacteria present were Clostridium sporogenes - a non-toxic Clostridium strain.
In response, Danone terminated its supply agreement with Fonterra and initiated legal proceedings.
Reliance on China exports
Responding to today's announcement, the New Zealand Engineering, Printing and Manufacturing Union (EPMU), which represents more than 600 Fonterra workers, blamed the proposed redundancies on New Zealand's increasing reliance on dairy exports to China.
“It is abundantly clear that New Zealand needs a national strategy for skills, jobs, and a strong manufacturing sector which isn't reliant on the price of commodities like milk powder,” said Bill Newson, national secretary, EPMU.
“It’s not good enough for the government to sit on its hands and talk about a ‘rock-star economy’ while our regions continue to suffer and well-paid, skilled jobs are vanishing.”
A consultation process has now been launched by Fonterra to "find new opportunities" for those affected by the reduction in operating hours.
NZDWU, which represents approximately 80 of the 114 employees with jobs on the line, said it would begin talks with Fonterra to "create good option for affected workers."
"We are working with the company on options like redeployment inside the business and in the wider Fonterra group as well as voluntary redundancies,” said Chris Flatt, national secretary, Dairy Worker Union.