Arla to Lay Off 250 Workers in Cost Cutting
As Arla’s production is running at full capacity to handle the current volumes of raw milk, the redundancies will occur at the offices in Viby, Stockholm, Leeds and elsewhere.
17/04/09 The global economic crisis has worsened what is an already tough global market for dairy products, putting Arla’s owners the dairy farmers under huge pressure. As a result, dairy giant Arla reported that it is now forced to make further savings of DKK 1 billion in 2009, which will include 250 redundancies. In February, Arla announced that its revenues for 2008 were 350 million kroner less than expected.
The global recession is having a major negative effect on consumer demand and in certain markets consumers have given up buying milk altogether. "Three months into the year, Arla’s budget is under additional pressure because of unfavourable exchange rates for sterling and the Swedish kroner. And the market is showing no signs of recovery. We, therefore, need to implement a savings programme which means we’ll also have to resort to redundancies”, says CEO Peder Tuborgh.
Savings are expected to amount to DKK 1 billion and will mean a reduction in the number of employees. 250 colleagues will be made redundant and 50 positions not filled. As Arla’s production is running at full capacity to handle the current volumes of raw milk, the redundancies will occur at the offices in Viby, Stockholm, Leeds and elsewhere.
“As a co-operative company, our aim is to maintain a good milk price for our owners, which has proved to be extremely difficult since the autumn of 2008”, explains Peder Tuborgh. “On March 1, we reduced our milk price by more than DKK 1 billion, which has put our owners in a difficult situation and there is now a risk that we’ll lose future milk suppliers”.
“We’re now taking serious action. Our overriding aim is to re-establish our earnings and remain competitive. We must act decisively to ensure that, in financial terms, we remain on track”, Tuborgh says.
Peder Tuborgh emphasises that the savings programme will not change the course mapped out for Strategy 2013 where innovation, structural changes and acquisitions as well as efficiency measures are the main components.
