Westland Milk says redundancies likely in bid to cut costs
By Paul McBeth
Sept. 14 (BusinessDesk) - Westland Milk says it will probably lay off workers to cut costs as the country's second-biggest dairy cooperative adjusts to the global slump in dairy prices.
The Hokitika-based company is reviewing staff roles throughout its operations, which chief executive Rod Quin said will likely result in redundancies. The review is being held in two rounds - one this month and a second in February - with affected staff consulted and given the opportunity to provide feedback. Westland wouldn't say how many or what positions may be cut.
"The resulting reduction in prices is flowing directly into lower shareholder payouts, which are, and are forecast to be, below the cost of owning and operating a dairy farm in New Zealand," Quin said in a statement. “A reduction in costs is required to realign our cost structure with the new reality of lower international prices and what is now a much more competitive New Zealand dairy industry.”
Westland employs more than 350 staff, according to the Dairy Companies Association of New Zealand, and the company's wage bill was $43.6 million in the 2014 financial year. Of that, 79 staff were on salaries of $100,000 or more.
Quin said the company stripped out $15 million of costs in the latest financial year, but more was needed in response to the fall in international dairy prices.
In July, Westland cut its forecast milk payout to farmers by 10 cents for the current season and for next season's by $1, in the face of sustained weakness in global dairy prices. The company will pay $4.80 to $4.90 per kilogram of milk solids for the 2014/15 season, with the final payout to be determined at the September board meeting. The forecast payout for the 2015/16 season is expected to be between $4.60 and $5/kgMS.