Dairygold warns of huge job cuts

WORKERS in the giant Dairygold Group have been warned they are facing significant job losses over the next three years.

Up to 1,000 workers face redundancy while another 500 jobs will have been sold on or contracted out, in a move the group claim is necessary to prevent financial crisis.

Dairygold faces losses that will have built up to over 26 million in 2007, unless action is taken.

To date 420 jobs have been accounted for through the sale of the two beef plants and the proposed outsourcing of 170 jobs in the transport division. In a letter delivered to all workers, chief executive Gerry Henchy said every aspect of the group’s operations faces scrutiny.

Where performance gaps exist, we will have no option but to “fix it, outsource it, shut it or sell it,” Mr Henchy told workers.

This is a three-year plan but it is expected the first redundancies will start within weeks. The group’s profits plunged by 20m last year and a loss was prevented only by the sale of 6m worth of shares in IAWS Plc.

Overall, the group employs about 3,200 workers, mainly in the North Cork area.

When the overhaul of the group is completed, about 1,700 of the current 3,200 jobs will remain.

At present dairying accounts for 700 employees in four plants. Up to three are under threat of closure.

Consumer foods and meats accounts for 770 employees while 26 Co-op Superstores - account for 550 employees. In the case of the Agri-Stores, 13 remain, while 26 small stores were shut during the summer. Over 410 employees are tied up in that division. The British, US and EU Operations account for 360 employees, while 60 are employed in administration. That gives a total of 2,850 workers. A further 275 jobs are in the red meats division.

They include Galtee Kilbeggan, sold to Dungannon Meats with 110 employees.

Galtee Charleville, 150 employees, sold to Dawn Meats, subject to Competition Authority approval. A decision is expected by early January.

Six pig farms are also for sale involving 25 jobs. The other issue facing the group is rationalisation of the dairy sector.

As many of three plants could be axed, but that will depend on whether the group can outsource some of its processing.

Mr Henchy has made it clear that the group has to rationalise its operations. Profitability of the group, based on future milk prices and declining margins, will still be a challenge, he said.

“The pressure on margins is getting tighter and tighter, competition is increasing and we have already fallen significantly behind.”

However, Mr Henchy says that with rationalisation the company can again become one of the great players in the Irish dairy sector.