Arla Foods restructure could lead to hundreds of job losses at UK sites

30 May 2018 --- Arla Foods has announced it is making changes to a number of its corporate group functions and its cheese production and logistics in the UK as part of the ongoing internal transformation of the company's cost-saving program. As a result, 195 positions are expected to be made redundant across the affected corporate support functions, according to the company. The impact is predominantly at the company’s head office in Aarhus, Denmark, however with smaller numbers of positions affected at the company’s administrative offices elsewhere in Europe, says Arla Foods.

Earlier this year, farmer-owned Arla Foods launched a three-year program to achieve €400 million (US$463.6 million) savings and efficiencies and transform Arla Foods into a stronger and more competitive company. The program, called Calcium, aims to reshape Arla’s organization to focus even more on the frontlines of the business, where the value exchange takes place with customers and consumers.

Optimized UK cheese production
As one of the UK’s largest cheese producers, Arla has identified a substantial opportunity to maximize its cheddar cheese production as well as improve efficiencies consolidating operations across its production and packing sites, where it currently has a capacity which is not currently being fully utilized.

Arla is also announcing a proposal to cease production at its Llandyrnog creamery, consequently moving cheddar cheese volumes to its Taw Valley and Lockerbie creameries. Also, Arla is proposing the integration of all its cheddar cheese packing lines into its Oswestry packing facility, which will result in the closure of its smaller Malpas and Lockerbie packing operations.

The proposed consolidation, subject to the completion of the consultation process, could also put a further 154 roles at risk of redundancy by the end of 2018.

Over the next three years, the Calcium program will transform activities throughout Arla, including production, products, procurement, promotional marketing and people. The program is running at a time when Arla is facing two unique external challenges as a result of the extent of the company’s exposure to the British pound and unfavorable developments in commodity markets.

“We want to achieve the goal of building a stronger, more competitive Arla, which serves our customers and consumers better and provides higher returns to our farmer-owners and that requires us to make tough decisions. For Arla to continue to deliver on our Good Growth 2020 strategy that brings innovative dairy products to millions of consumers around the world, we must become one of the most agile and frontline-obsessed companies in today’s fast-paced and complex global food industry,” says CEO of Arla Foods, Peder Tuborgh.

“It is never easy to say goodbye to valued colleagues, especially in these circumstances, and I would like to thank those people who are leaving us for the contribution they have made to Arla Foods, and I wish them well for the future. We will provide our full support to those colleagues affected during this process,” he explains.

With the restructuring program still in its early stages, Arla Foods says it is too early to disclose what the specific consequences will be within other particular areas of the company, including the total number of jobs that will be added or removed by the ongoing work. However, the company expects the overall amount of positions to be lower.