Air of inevitability about works cuts

The knife has hung over the Alliance Group's Mataura sheep meat processing plant for some time.

In February last year, meat workers took pay cuts of 10% to 15%, or up to $400 a week, to try to make the facility viable, after management warned that overheads were a third to a half greater than the company average, due in part to the plant's age and size.

Union officials were told that boners at the plant's sister Southland plant, Lorneville, could process lambs for between $1 and $1.50 a carcass less than Mataura, and clean-ups at Mataura were three times more expensive per lamb equivalent than other sites.

Workers agreed to take lower pay and Alliance spent $14 million on capital works at the plant along with a further $13.1 million upgrading the beef plant, as it had originally intended to do.

This appears to have only delayed restructuring, with sheep numbers in the plant's catchment remaining low and the economics of sheep farming in the past year putting pressure on meat processors.

Competition for livestock between processors maintained the price paid to farmers, but the global recession squeezed returns from the marketEarlier this month, Blue Sky Meats, which operates a single sheep processing chain plant down the road from Mataura at Morton Mains, announced a $450,000 loss for the last financial year, compared with a $3.7 million profit the previous year.

Blue Sky management said a combination of fewer sheep, with the Otago and Southland flock falling 25% between 2000 and 2010, and lower returns from recession-hit Europe, forced the company to consider plans to reconfigure its work force, which could mean reducing three shifts to two and 100 workers losing their jobs.

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