EMCC European Monitoring Centre on Change

Dairygold

Company/Organisation:
Dairygold

Geographic Location

Country: Ireland
Region: Southern and Eastern

Company

Sector: Manufacturing
Manufacture of food products, beverages and tobacco products
10.5 - Manufacture of dairy products
Number Employed: 3200
Group: Dairygold

Employment Effects

Announcement Date: 26-11-2003
Planned Job Reductions min: 500
Planned Job Reductions max: 500
Type of Restructuring: Internal restructuring
Direct Dismissals: 500

Additional Information

The Daiygold Group, which manufactures a range of dairy products, has announced plans to cut 500 jobs in a package that will cost around €50 million. An average payment of just over €60,000 to each departing employee is provided for. The redundancy terms that have been agreed with the unions are 4.6 weeks pay per year of service, plus the new statutory entitlement of two weeks pay per year of service – with a cap of 2.2 years’ earnings. The calculations include shift and bonus payments. While the unions have agreed to the terms by a margin of four to one, they object to any compulsory redundancies. The view of senior management is that this rationalisation is long overdue. The Dairygold CEO is clear that the current job shedding plan could be the start of other reductions further along the line. However, it is understood that further rationalisation exercises will be more modest. According to the CEO, the background to the Group’s current difficulties is that, on the consumer foods side, the consolidation of the European retail sector has resulted in a shift in the balance of power towards the major multiple customers. The situation is being compounded by a shift in consumer preferences. The situation 'has changed dramatically and continues to change. Today, almost 20% of all food products purchased in Irish grocery retailers are own label – and own label accounts for an even greater proportion in Europe, with the UK now approaching 40%. Ireland is expected to follow this trend in a very fast manner – to go from 20% to 40% plus own label'.