BELGIUM – Dairy cooperative Milcobel has revealed that it plans to close its drinks department in Schoten, including ceasing operations of production of milk and milk drinks at its Schoten production facility.
The plans, which will also see associated support services in Schoten and Bruges be discontinued, were first announced by the dairy cooperative at a works council.
“Over the past ten years, the market has declined 3 percent annually. The margins on milk are also very low or even negative. In addition, the factory in Schoten is very outdated, which would require major investments,” explains Kathleen De Smedt, a spokeswoman.
At the beginning of the year, Milcobel launched a transformation project, which aimed to strengthen the profitability of the cooperative and increase the milk price for member dairy farmers.
“Over the past ten years, the market has declined 3 percent annually. The margins on milk are also very low or even negative. In addition, the factory in Schoten is very outdated, which would require major investments,”Kathleen De Smedt – spokeswoman
One aspect of the project was looking for potential savings and according to Milcobel, its drinks business has been loss-making for years.
The company says that the production plant in Schoten is ‘very outdated’ and the investment it requires is not feasible due to declining market demand and low or negative margins.
According to Milcobel, the closure of the drinks department could lead to the loss of 167 jobs.
“The employees react with dismay and ask why this should be done. We will have many questions about this decision during the consultation phase.” The socialist union ABVV, cited by Flemish newspaper Het Nieuwsblad, said.
Milcobel is now beginning a legally prescribed information and consultation procedure with its social partners.
Earlier this year, the company named Erik De Cock as CEO ad interim, following the departure of Peter Koopmans ‘by mutual agreement’ at the end of December 2019.
Erick announced a plan to cut the company’s costs significantly in July. Among other things, he wants to simplify the business structure. This year Milcobel wants to save 5 percent on costs. At least 10 percent must be saved from 2021.
Milcobel specialises in research & development, production, sales & marketing and customer support of dairy ingredients for the global food and beverage industry.
Milcobel is the largest dairy cooperative in Belgium. The dairy farmers who are affiliated produce more than 40 percent of the total amount of Belgian milk. The cooperative has 2,525 dairy farmers as a member and has 2,000 employees at seven production locations.
Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE