The Alliance Group will not be starting its sixth sheepmeat processing chain at the Lorneville meat works in Southland this season.
The company said this is due to a combination of cost, falling sheep numbers and improved efficiency throughout its network, which management said will enable throughput to be maintained.
Workers will be redeployed, minimising job losses.
Chief executive Willie Wiese said six chains at Lorneville are normally operating by Christmas. The decision not to start the sixth applies only to this season.
It reflects livestock and weather forecasts.
“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 said.
Wiese said the decision was not in response to last year’s $97.9 million loss before tax.
Factors in that result were revalued inventory, soft markets and the cost from the early recruitment of staff early ahead of an anticipated dry summer that never eventuated.
Wiese said Alliance is seeing dividends from its focus 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 are our capacity needs are.”
Alliance has increasingly relied on overseas staff to staff the chain, but that also comes with the added cost of finding accommodation.
Wayne Shaw, Alliance’s processing and safety manager is not expecting issues for suppliers getting stock killed.
“We do not believe the proposed reconfiguration will have a material impact on the ability of farmers to get their livestock processed. However, we will be monitoring the situation, in particular, during extreme dry conditions.”
There will be fewer full-time employees at the plant but he said that should also be minimised by redeployment.
“As this is a proposal and we need to talk with our people, it is too early to confirm how many will be directly impacted.”
Bob Blackie, the NZ Meat Workers Union southern organiser, said between 150 and 200 people who work on the chain and associated boning room will be affected, but he is confident redeployment will mean a minimal impact on workers.
“It’s not a biggie, it’s just a process that we will have to work through.
“There won’t be any real job losses, but there will be less opportunity for people to come into the industry.”
Blackie said the closure will reduce the reliance on overseas labour, which has peaked at 200 in recent seasons.