Relying on milk powder exports to China has risks. Photo by
Job losses at Fonterra's Canpac facility in Waikato show
the dangers of relying on dairy exports to China to sustain the
economy, union leaders say.
Staff members gathered at the Kingsgate Hotel in Hamilton,
where a senior Fonterra executive told them the plant was
running below capacity and changes were needed.
They emerged from the meeting downcast and refused to speak
with media, saying confidentiality agreements with their
employer prevented them from doing so.
Fonterra director of New Zealand operations Robert Spurway
said the proposed changes could mean around 110 roles might
not be required at the site which now employs 330.
Engineering, Printing and Manufacturing Union national
secretary Bill Newson said the announcement from Fonterra had
followed a downturn in business over the past five years.
Mr Spurway said the changes had nothing to do with last
year's botulism scare but were more about simplifying the
business, including its range of products, to make it more
''We are running below capacity, so this is about us being
clear about what we face in the future.
''There's no surprise for many of the staff. One of the
things that was apparent to the team was they were running
below capacity and that needed to change.''
Mr Newson said it was clear New Zealand needed a national
strategy for skills, jobs and a strong manufacturing sector
which was not reliant on the price of commodities such as
''It's not good enough for the Government to sit on its
hands and talk about a `rock-star economy' while our regions
continue to suffer and well-paid skilled jobs are vanishing,''
EPMU members were entitled to redundancy compensation as part
of their collective agreement. The union would work closely
with Fonterra to ensure any job losses were minimised, Mr
Mr Spurway said there would be changes ''right across the
board'', affecting not only staff on the plant floor but also
people in senior management positions.
A formal consultation with staff would likely begin next week
and he expected the proposed changes would be enacted by late
next month or early September, Mr Spurway said.
Staff at the plant packed infant formula and milk products,
but changes could also see the plant focus more on paediatric
products and high value-added products, Mr Spurway said.
Canpac is Fonterra's largest secondary packager of milk
powders, and supplies branded nutritional powders, bulk
blended nutritional milk powders, cans and can components
around the world.
Labour Party economic development spokesman Grant Robertson
said Fonterra was facing tough times with falling milk prices
and increasing competition from other dairy producers on the
The job losses highlighted the risk the Government was taking
in allowing the export base to narrow. New Zealand must not
be so reliant on one industry, Mr Robertson said.
''Exporters are also hurting because of the Government's
hands-off approach to curbing the high dollar. Questions must
be asked about whether these jobs are being lost because our
overvalued dollar is squeezing out manufacturing in New
Zealand,'' he said.
The Reserve Bank is likely to lift its official cash rate
again this morning, putting more pressure on the dollar,
which has fallen in recent days after near highs against the
Australian and United States currencies.
ASB chief economist Nick Tuffley said New Zealand's
trade-weighted index - the basket of currencies from the
country's main trading partners - had pulled back from record
highs on lower dairy prices, benign inflation and risk
ASB had cut its milk price forecast for next season after an
8.9% fall in GlobalDairyTrade dairy milk prices last week.
Compared with this time last year, dairy prices were down by
about a third, he said.
''These falls are more than we had factored in previously. We
had expected dairy prices to stabilise through the middle of
2014 before recovering. We would have expected to have seen
clearer signs prices were stabilising at this juncture. But
these signs have yet to emerge.''
ASB cut its milk price payout forecast by 80c a kilogram of
milk solids to $6.20.
If current trends continued, forecasts could head even lower,
Mr Tuffley said. The possibility of a sub-$6 milk price for
the 2014-15 season was increasing.