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Australia’s Goodman Fielder tightens bakery noose

By Kacey Culliney , 26-Jun-2012
Last updated the 26-Jun-2012 at 11:46 GMT

Goodman Fielder hopes to stabilise costs with consolidation across its bakery sector
Goodman Fielder hopes to stabilise costs with consolidation across its bakery sector

Australian food firm Goodman Fielder is fusing its bakery business with three site closures as part of a strategic reorganisation of its business to reduce costs and improve efficiency amid struggling sales.

The Sydney head-quartered food company will shut its Rockhampton bakery facility on 20 July and its Cairns and Melbourne sites next year on 30 June. It plans to consolidate operations by upgrading its Townsville bakery to create a ‘manufacturing hub’ for customers across the Queensland region.

Goodman Fielder said the planned closures represent part of its ‘Project Renaissance’ which aims to save A$100m by 2015 and optimise manufacturing and supply chain across all its business arms.

The food company produces a vast range of grocery products across bakery, dairy, snacks, condiments and oils and dressings.

Chris Delaney, CEO of Goodman Fielder, said the firm has identified its bakery segment as an area to consolidate and improve manufacturing efficiency.

“In our Australian baking business specifically, we are implementing further changes to our business model to create a more efficient and sustainable business,” Delaney said.

“This is in response to both the current difficult trading environment and also recognising that the fundamentals of the industry in Australia have changed significantly,” he said.

Struggling sales

The firm reported revenues of A$1.3bn, down 3.7% for its half-year results ending 31 December 2011 that it said was a culmination of a challenging retail environment, weather disruptions, commodity spikes and increased overheads. Its bakery business was down 8.2% with A$490.1m in revenues.

Pankaj Talwar, managing director for the bakery category at Goodman Fielder, said the move was “a difficult but necessary decision to ensure we can create a more efficient manufacturing footprint in our baking business.”

“While three bakery facilities will close, we are also investing in our other facilities to ensure we continue to reliably supply our customers with fresh, quality product in these regions,” Talwar said.

It is anticipated that there will be 115 job losses, but the firm said it will ensure opportunities for all employees to move to alternative sites and those unable will be provided with full redundancy provisions and assistance in finding new work.

Simplifying bakery

The food firm also announced plans to slash its bakery range by 33% from 450 unique products to around 300. It said simplifying production will “improve efficiency across its bakeries, improve on-shelf availability and increase consumer satisfaction.”

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