This decision comes amid a review of its business following significant changes, including a declining milk pool, in the Australian industry. It coincides with a global review of Fonterra Co-operative’s asset portfolio which saw the unwinding of its Darnum joint venture with Beingmate earlier this year.
The Dennington factory, which currently produces lower value products, is over 100 years old, and was acquired by Fonterra in 2005.
The closure will affect 98 Dennington employees, and Fonterra’s immediate focus is on the wellbeing of these people and their families, and providing them the support they need now and in the months ahead.
Managing Director Fonterra Australia René Dedoncker says that the decision to close the site, although difficult, is a responsible decision for the long-term.
“We know this is very tough for our people, and we will do the right thing by them,” says René.
Australian dairy continues to feel the impact of the ongoing drought and significant change. The reduction in the Australian milk pool, coupled with excess processing capacity across the industry, has resulted in heightened competition for milk and the underutilisation of manufacturing assets.
“In this current operating environment, it’s more important than ever that we put our farmers’ milk into the highest returning products to ensure we can run a sustainable business that is here for the long-term.
“The Dennington factory is under-utilised and the unfortunate reality is, the site is not viable in a low-milk-pool environment and we need to remove capacity.
“While this is terribly difficult news to share, it is a responsible decision that consolidates our manufacturing in Western Victoria, making our three regional Victorian milk processing sites more efficient. Following the closure of Dennington, milk currently processed at Dennington will be relocated to our Cobden manufacturing plant.
“Coupled with our two Tasmanian factories and secondary processing plant at Bayswater, this gives us the right asset footprint to ensure both our farmers’ milk and manufacturing facilities are efficient with milk going into higher returning products,” says René.
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