The co-op is axing 523 roles from its central procurement, finance, information services, human resources, strategy and legal teams.
The redundancies will cost the co-op $12 - $15 million; however it will bring on-going payroll savings of $55 – $60 million per annum.
This morning Fonterra's GDT price index recorded a 10.7%, its ninth consecutive drop. The GDT result will surely force Fonterra to revise its milk payout for the season, which stands at $5.25/kgMS.
Fonterra chief executive Spierings says the redundancy news has been unsettling for the people affected but the cooperative had to change if it was to remain strongly competitive in today's global dairy market.
"Reducing the number of roles in our business isn't about individual competency; it is about continually improving the way we deliver performance."
The affected staff would begin to leave the cooperative in September.
The cooperative has also informed staff that on 5 August it will begin consultation on new business structures with its people in administration roles, sales – ingredients, consumer, marketing, research and development, communications, health and safety, food safety and quality, group resilience and risk, property, procurement and change management.
Spierings says the leadership was developing initiatives to deliver value right across the organisation.
"The key aims of the review are to ensure that the Co-operative is best placed to successfully deliver its strategy, increase focus on generating cash flow, and implement specific, sustainable measures for enhancing efficiency.
"A simple example already identified by our supply chain team is a logistics solution that increases the utilisation of export containers leaving our distribution centres, saving up to $5 million a year."
The review includes measures to improve profitability at Fonterra's Australian business as well as a series of additional measures to remove barriers across the organisation to enable it to unlock more value.
