Danish Crown plans to cut another 150 jobs
In early summer 2021, Danish Crown was at full speed with exports to Asia, and prices for pork were attractive globally. COVID-19 and growth in the country's own production of pigs brought an abrupt end to sales to China, and then followed Russia's invasion of Ukraine, which caused inflation to explode and sent consumer confidence crashing. Massive demand and historically good prices have therefore been replaced by reluctant consumers and low exports to the attractive markets outside Europe.
’’These are drastic changes that have taken place in a very short time. We cannot change the development of the market, but we can do something about our own business. We based our strategy on the back of a stable and strong market and positive future prospects. Now everything has turned upside down, and therefore we have reconsidered the way to achieve the goals we have set ourselves,’’ says Jais Valeur, Group CEO of Danish Crown.
In order to strengthen our competitiveness and secure capital for the planned investments, the management has reviewed Danish Crown's entire business with the aim of cutting costs and trimming processes and functions.
At the same time, all functions from sales to production and service functions to administration are being streamlined. This must be done, among other things, through a simplification of the group structure, where, for example, sales companies outside Denmark are merged or closed down. It is an extensive process which is expected to run over the next six months. For all changes, it is applicable that they will take place in a way and at a pace that will not be a nuisance to customers. The goal is to reduce costs by DKK 400 million annually.
A total of 150 positions are expected to be cut, of which around 100 are expected to be in Denmark. This will primarily be in the business unit Danish Crown, which was created through a merger of Danish Crown Pork and Danish Crown Foods, but there will also be a reduction in group functions.
’’It is sad to have to say goodbye to so many talented employees, but we really have no choice in the current situation. Costs, efficiency and a tight supply chain all the way from the farmer to the consumer are absolutely central in the market we are in right now. That is why I would also like to emphasize that it is not the individual who has not lived up to his responsibility, but that it is the extraordinary situation we are in, that unfortunately requires an adaptation of the organisation,’’ says Jais Valeur.
What will happen at the group's factories and slaughterhouses in the coming year will largely depend on market developments. The first step towards a more efficient production setup was taken in Germany last week, when a factory with just over 200 employees in Boizenburg, east of Hamburg, was set to close. The next step will be a reduction of slaughter capacity at the Danish Crown slaughterhouse in Essen southwest of Bremen. For a period up to the first of May, up to 40 percent less will be slaughtered than before, after which the future capacity will be determined.
’’It is important to stress that we are not going to change our Feeding the Future strategy and the investments we have started in the UK, among others. What we are doing now is precisely about strengthening the basis for our continued work with sustainability and the goal of significantly raising the value of our shareholders' raw materials, says Jais Valeur.
Danish Crown's employees have been informed of the expected redundancies and a negotiation committee is now being set up with management and employee representatives, which will help clarify the extent of redundancies and discuss terms of resignation.
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