Valio, Finland's largest dairy, announced today it is launching a consultation on April 22 concerning around 2,900 employees at its head office in Helsinki and across production and logistics.
The negotiations, which are expected to last six weeks, could lead to the loss of 320 jobs, said Valio, which employs a total of 4,400 people, including 3,600 in Finland.
“In the cooperation negotiations over the next six weeks we shall investigate the most efficient way to manufacture our current product range and that for future needs,” said Mika Koskinen, executive vice president of operations, Valio.
“Some head office operations will be reorganised, including customer marketing, consumer service and some technical services.”
Valio's workforce reduction efforts "correspond to the current operating environment," he said.
In the last year, Valio has been hit by a series of setbacks.
In July 2014, the Finnish Market Court rejected an appeal by Valio against a €70m penalty issued to it by the Competition and Consumer Authority (FCCA) for abusing its dominant position in the country's fresh milk market.
Its share of the Finnish has since fallen to less than 30%, it said.
Finnish consumer purchasing power has also "weakened."
Most notable, however, is the Russian embargo on Western food imports.
On August 7 2014, Russian Prime Minister Dmitry Medvedev introduced a one-year ban on the import of beef, pork, poultry, fruit, vegetables, milk and dairy products from the European Union (EU), United States, Australia, Canada and Norway.
Lactose-free milk and dairy products were removed from the Russian import blacklist on August 21 - a decision Valio branded “extremely significant.” Within a week, however, trucks containing Valio lactose-free milk, yogurt, cottage cheese and sour cream were stopped at the Russian border.
According to the company's Russian website, Finnish Valio products, including FIN butter, Eila lactose-free products, and Oltermanni cheese, are still “temporarily not available” in Russia.
“Most of the milk that was previously exported to Russia is now processed into milk powder and industrial butter for the global market, and their profitability is of a completely different order to consumer products exported to Russia,” said Koskinen.
Sales of Valio products in Russia fell €120m to €258m in 2014 as a result of the ban.
With no end in sight, Valio's group sales are expected to fall by a fifth.
“Exports to Russia are still under embargo and uncertainty there is expected to continue for a long time," Koskinen added.