Dutch dairy giant FrieslandCampina today announced it will shutter its Den Hollander Food facility in Lochem, the Netherlands in the first quarter of 2016, with the loss of 139 jobs.
FrieslandCampina acquired speciality cheese manufacturer Zijerveld and its packaging arm, Den Hollander Food, from MYWO Food Group in January 2013.
Two years on, FrieslandCampina believes the Den Hollander Food plant in Lochem, which packages sliced, chunked, cubed and grated cheese, is too small to meet "future packaging requirements."
As operations wind down at Lochem, the three lines installed at the Lochem plant will be transferred to FrieslandCampina sites in Wolvega and Leerdam.
In the meantime, FrieslandCampina will attempt to sell the facility.
Jan Willem ter Avest, spokesperson, FrieslandCampina, told DairyReporter.com the Dutch dairy expects to package "more efficiently" at its Wolvega and Leerdam plants.
"We can place the machinery we have at Lochem there," he said. "That's not possible at Lochem, it's a rather small place."
"Lower costs or you're out of the market"
European cheese pricing pressures at retail level "played a role" in FrieslandCampina's decision to close " said ter Avest.
"The cheese market is very price competitive," he said. "We have to lower production costs."
"When prices get lower you have to lower costs or you're out of the market."
The Russian ban on Western food imports, which hit FrieslandCampina to the tune of €80m in 2014, did not contribute to its decision, said ter Avest.
"Greater variety of cheese"
FrieslandCampina is setting aside €19m (US$20m) to cover the cost of moving equipment from Lochem and finance the purchase of new packaging lines for its Wolvega and Leerdam plants.
With these additional lines, its plants in Wolvega and Leerdam will be able to "handle a greater variety of cheese packaging formats for both the European and international markets," the company said.
Nine jobs will be created at Wolvega and Leerdam by the shift.
In the meantime, FrieslandCampina will work to find positions for Den Hollander Food's 139 employees.
"We are doing our best to help them get other jobs inside FrieslandCampina and outside," said ter Avest.