Meat co-op dilemma
Meat processor Alliance Group's cash-strapped farmer shareholders face a dilemma - either pour more money into the co-operative or risk losing 100% ownership and control.
The company has blamed a combination of increasing costs, falling sheep numbers and improved efficiency throughout its network for the move. Management at the Invercargill-based plant believes throughput will be maintained, with workers redeployed to minimise any job losses.
Lorneville normally has six chains working by Christmas, but chief executive Willie Wiese says the decision not to start the sixth this year only applies to this season.
"We looked at the five-year average, the current livestock census and the forecast farmer supply as it has played out, and we can accommodate that volume across our network," he explains.
He denies that the decision is in response to Alliance's $97.9 million loss before tax recorded late last year. Wiese claims that loss was due to revalued inventory, soft markets and the cost from early recruitment of staff early ahead of an anticipated dry summer that never eventuated.
He adds that Alliance is focusing on becoming New Zealand's most efficient meat processing company.
"We are making sure that as we build to become the country's most efficient meat processor, we can also look at what our capacity needs are."
He says the company has increasingly relied on overseas staff to staff the chain, but that came with the added cost of finding accommodation.
Alliance's processing and safety manager Wayne Shaw says there will be no issues for farmers wanting to get stock killed.
"We do not believe the proposed reconfiguration (dropping the chain at Lorneville) will have a material impact on the ability of farmers to get their livestock processed."
He says Alliance keep an eye on the situation - especially during extreme dry conditions.
Shaw concedes that there will be fewer full-time employees at Lorneville, but says it was too early to confirm how many workers will be directly impacted. It is believed that closing the chain at Lorneville will reduce Alliance's reliance on overseas labour, which has peaked at around 200 people in recent sessions.
