The company has begun consulting employees and their representatives regarding the closure of its glass bottling dairy at Hanworth and its specialist cream potting facility at Chard.
The proposal to end production at Hanworth, which currently employs around 200 people, followed a strategic review of the company’s residential delivery service, said Dairy Crest. It announced the decision at the same time as its pre-close interim trading figures.
In that statement, it claims the closure of the factories would cost the business £15M over the next two years. It said proceeds from the sale of these and other sites would more than offset that, but added more costs associated with writing down non-cash assets would total a further £15M.
It was necessary to protect the long-term future of this business and reflected reduced demand for milk in glass bottles, it said. However, trades union Unite blamed the move on the “supermarkets’ price squeeze on dairy producers”.
Dairy Crest had been “caught between the unrelenting pressure of the supermarkets to drive down prices for customers and the legitimate desire of farmers to get a decent price for their milk”, said Unite.
The organisation said it would work with the company and employees to investigate whether they could be relocated to other Dairy Crest plants.
‘Death knell of traditional milkman’
“As doorstep delivery moves over to the use of plastic bottles, what we are seeing here is the death knell of the traditional milkman delivering bottled milk to the doorstep as the nation sleeps,” said Unite national officer Mark Draper.
“The reason for this is that supermarkets are selling four pints for £1, while dairy companies’ delivery prices are 79 pence a pint – they just can’t compete.”
Although Dairy Crest expected the Hanworth site to remain operational for about two years the eventual closure was being announced today to give employees there clarity over the plant’s future, it claimed.
Safeguard livelihoods
It would also reassure the company’s 1,400 milkmen and women that Dairy Crest would strive to safeguard their livelihoods as consumers switched to fresh milk in plastic, rather than glass, bottles, it said.
The proportion of milk put into glass bottles had fallen from 94% in 1975 to just 4% in 2012 as consumers found plastic bottles more convenient and safer than glass, it added. They were also more eco-friendly, Dairy Crest said.
During its remaining period of Hanworth’s operation, production at Dairy Crest’s three plastic bottling dairies at Chadwell Heath, Foston and Severnside will be boosted to meet demand from residential customers, it said.
After Hanworth’s closure, Dairy Crest’s milkmen and women would deliver fresh milk solely in plastic bottles, it added.
Economic grounds
It said it had considered many options to improve the economic viability of the Chard site, where around 60 people are employed, without success. As a result it proposed to close the site on economic grounds in the second half of 2015.
“The decisions to consult on the closure of our Hanworth and Chard sites have not been taken lightly, but they are right for the long-term future of the business as a whole,” said ceo Mark Allen. “We will do all we can to help employees who may be affected by these proposals.
“At Hanworth nothing is going to change immediately but sales of milk in glass bottles are falling and we have to give our employees at Hanworth clarity over the dairy’s future. We also have to let our milkmen and women know that we are doing all we can to protect their livelihoods.
“Our decision to consult with employees at Chard is an economic one. We have tried to make this site viable for many years but regrettably this has not proved possible despite the best efforts of a dedicated workforce.”
In its pre-close trading statement, Dairy Crest also said it expected to close its Crudgington spreads factory, plans for which were first announced in September 2012, early in the second half of the year.