National Foods cheese shakeup: closures and investments

Posted by Nicole Eckersley on 16th March 2011

King Island cheesesNational Foods has announced the results of its six-month review of cheesemaking operations across Australia, revealing plans to consolidate Tasmanian operations at its Burnie site, close its Victorian locations and sell its South Australian sites.

In Tasmania, the Kirin-Lion-Nathan owned dairy giant will invest $120 in its Burnie facility to produce all its specialty cheeses, transferring operations from its Heidi Farm site, and closing Kings Meadow over three years at a loss of 40 jobs. Only King Island will be relatively untouched, receiving a $12 million boost to continue high-quality cheesemaking operations.

The Murray Bridge and Jervois sites in South Australia are likely to be sold to an as-yet-unnamed ‘interested party’, and 103 people will be transitioned to the new owner.

Victoria’s Simpson and Campbellfield sites will be wound down over three years, with 133 jobs lost. The company’s joint venture with Warrnambool Cheese and Butter at Allansford was not included in the review, but National Foods said the site could expect “minor adjustments”.

In Queensland, the company’s Malanda site will continue to manufacture mozarella in an effort to utilise contracted milk supplies from suppliers in Far North Queensland, which became surplus after National Foods lost the Woolworths private-label milk contract.

National Foods said the planned investment in Tasmania would create a modern, market-leading, high-volume specialty cheese manufacturing facility in Burnie, with significant opportunities for growth and innovation.

As part of its planned $120 million investment in the Burnie site, National Foods’ Managing Director Andrew Reeves said the company intends the site to have a 25,000 tonne cheese making capacity per annum, requiring an additional 10,000 square metre building expansion.

“National Foods’ restructure of its cheese business is the key to unlocking further profit and growth potential from the specialty cheese category and our preferred investment in the Burnie site will bring a high level of automation to the plant and realise that potential,”

Reeves said the National Foods cheese business had evolved through brand and site acquisitions over the past 10 years with little or no manufacturing optimisation,” said Reeves.

“The review was driven by the need for National Foods to support its market leading brands and develop a long term sustainable business model based on modern and market leading manufacturing practices.”

The company said the six month review considered the duplication in the network (both assets and process), the safety and wellbeing of employees, limitations in productivity and growth, innovation, technology and the long-term viability and sustainability of the sites, as well as capital requirements to meet environmental standards and plant replacement.

According to National Foods, the review concluded that it was not sustainable to operate multiple manufacturing sites and that investment in world-class manufacturing should be focused on.

Reeves said that it was unfortunate that sites had been earmarked for closure as a result of the review.

“We did not take these decisions lightly. Our people at these sites have done a great job producing high quality product for many years. It is critical for our long-term viability that we continually review our operation and make sure we are running as efficiently as possible, minimise duplication and optimise use of our resources.

“As a result of this review National Foods will be able to deliver an improved and efficient manufacturing platform to support future growth and innovation. It will also enable us to optimise current and new technology,” Reeves said.