The decision follows a 45-day statutory review of the company’s dairy network which examined factory utilization against a backdrop of declining consumption of fresh milk and changes in retailing.
During the review, Foston dairy was identified to be most at risk due to its size and inability to absorb significant production volume from other dairies, its current level of utilization and its geographical position relative to customers.
The consultation included discussions with employees, unions and other employee representatives and the company said it is committed to providing support for those affected over the wind down period.
Most dairy farmers who supply Foston will be unaffected with milk switched to be processed at other dairies, but the company will be in direct contact in the next week with a small number of farmers who are located in areas not close to other dairies in the MMI network, to discuss and consider future options for their milk.
Patrick Müller, chief executive at Müller Milk & Ingredients said, “We fully recognize that this decision will be devastating for our employees at Foston, but if we are to have any prospect of building a fresh milk business which is sustainable in the short and longer term, we need to make significant changes to reduce our costs.
“MMI has the best invested network in our industry. But we must adapt quickly to meet the realities of a changing market. Inaction is not an option and would place at risk the future viability of fresh milk, long regarded as a staple of the nation’s fridges.”
Müller said that, where possible, the company will offer opportunities to relocate within the company’s network, and will support those who do not wish to relocate or for whom there are no roles.
The dairy network review was part of MMI’s Project Darwin program, which aims to secure a sustainable future for the business through cost reduction and margin improvement.
The transformation program includes a review of every aspect of MMI’s operations, logistics, back office and people organization to simplify the business, reduce costs and increase customer focus and accountability.