News

Closure has silver lining

by
May 10, 2017

Cobram’s Murray Goulburn factory is set to benefit from the closure of the company’s Rochester and Kiewa factories.

Cobram’s Murray Goulburn factory is set to benefit from the closure of the company’s Rochester and Kiewa factories.

The Courier understands milk supply from Rochester and Kiewa will transfer predominantly to Cobram, with a phased expansion of manufacturing capability at Cobram to manage the transfer of production.

Overall, MG is expected to spend $60million at Cobram and Leongatha to support the relocation of manufacturing from sites being closed.

It is expected that additional jobs will be created at Cobram and the company would be exploring redeployment opportunities with MG employees from the impacted sites.

Last week Murray Goulburn announced it would close three factories — Rochester, Kiewa and Edith Creek in Tasmania — as part of its asset and footprint review, which was prompted in response to reduced milk intake across the company.

The staged closures, which will begin in the second quarter next year, are expected to affect 360 employees and have a significant impact on the towns where the factories are located.

In last week’s announcement, Murray Goulburn said it would write-off the controversial $148million Milk Supply Support Package, in a move welcomed by many.

The decision to scrap the MSSP, widely referred to as a ‘clawback’, would go a long way to rebuilding trust and confidence between farmers and the major processor, United Dairyfarmers of Victoria president Adam Jenkins and MG chief executive officer Ari Mervis said.

Future payments of the MSSP were due to recommence from July.

The company also announced it expected to maintain the forecast 2017 farm gate milk price of $4.95/kg milk solids.

These decisions were a continuation of efforts to address MG’s cost base, improve efficiencies and ultimately increase earnings and farm gate milk pricing, the company said.

‘‘At MG we are acutely aware of the impact that our decisions will have on our various stakeholders, including the communities in which we operate,’’ Mr Mervis said.

‘‘We are committed to ensuring that we provide our affected employees with appropriate levels of support and the recognition that they deserve during this period of transition.

‘‘MG will support employees by providing access to career transition and redeployment services as well as working with federal and relevant state governments to leverage existing programs.

‘‘These have been difficult decisions to make, however they are necessary steps on the journey to ensure the future strength and competitiveness of Murray Goulburn.

‘‘A strong MG is of fundamental importance to the Australian dairy industry and these decisions are necessary to lay the foundation for the future.’’

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