Dairygold to cut jobs as losses mount

DAIRYGOLD faces mounting losses that will hit 26 million in 2007 unless 1,500 jobs are shed.

Chief executive Gerry Henchy spelt out the dire consequences facing the 3,200-strong workforce in a special edition of the group’s Employee News.

Last year, Dairygold’s operating profits fell from 25.2m to 4.8m. The sale of 6m worth of shares in IAWS kept the company profitable. In reality the group lost close to 4m on its trading operations in 2002.

Details of the tough times ahead are contained in a report by management consultants Ernst & Young. The report warns if the status quo is maintained, losses will start to impact on the group from 2005. By the end of that year, Dairygold would face a loss of 9m followed by 19m in 2006 and reaching 26m the following year.

Dairygold has announced it is to cut 1,500 jobs. However, Mr Henchy has warned workers that standing still is not an option.

“Dairygold must and will be right sized in order to build a new Dairygold that will be a leader in the food industry,” he said.

To achieve that, the group must look to where performance gaps exist in the businesses, he said.

“We will have no option but to fix it, outsource it, shut it or sell it” he added. Last night, a company spokesman said that jobs will start to go in the near future, as the group’s four divisions are put under intense scrutiny.

Already Dairygold’s two beef plants have been sold with the loss of 250 jobs, while another 170 are going under the outsourcing of the transport division.

Up to 26 small stores have been closed, but major decisions involving the livelihoods of another 1,000 workers are due to be taken over the next three years.

Last year, the group’s profits plunged 20 million and Mr Henchy said if the future of the group is to be ensured it will need to generate profits that are 5% of turnover.

Some competitors like Kerry Group and Northern Foods are doing much better than that, he said.

Even if the company is cut down to survival size, Mr Henchy warned tight margins and pressure on profits will continue to be an issue for the group in the years ahead.

Recently the Joint Negotiating Forum, involving unions and company representatives, fully backed a redundancy package, the terms of which were supervised by former Labour Court chairman John Horgan.

The total cost of the redundancy package has not been disclosed, although the group has promised the conditions will be “fair”.