A major business review has been undertaken by Isle of Man Creamery in response to tough trading conditions for the Creamery and also as a result of extreme pressures on Manx dairy farmers, which have had a knock-on effect for the Creamery.  The amount of Manx milk being supplied to the Creamery fell by 11% in 2012, and fell by a further 11% in the first four months of 2013 compared to the same period last year.  The main contributing factors to this fall in the Island’s milk production have been the appalling weather conditions over the last year and dramatic increases in animal feed costs which have had a further devastating effect on the profitability of dairy farming.

Further afield, milk production in the UK is down by just under 10% this year.  Other creameries and milk processors are feeling the pressure of challenging market conditions.  One Creamery owned by farmers in Northern Ireland, Augher Creamery, announced its closure in April.  Most small cheese manufacturers have sold much of their milk into the spot raw milk market rather than spending money on making cheese that they would make a loss on.

Isle of Man Creamery’s wide-ranging review of its costs and revenue has included a reduction in staff numbers.  As part of this review, 5 staff have already accepted voluntary redundancy packages, and 5 further staff have accepted redundancy offers.  Other savings have been made by staff changing their working hours.

Managing Director Findlay Macleod explained the effect that the reduction in milk intake has had on the Creamery’s costs and revenue: “Lower milk intake directly impacts on the efficiency of our business, by significantly increasing the unit cost of production and processing.  Rising costs on farms mean that we also have to increase what we pay Manx farmers for their milk to secure our supply base.  This all means that our margins are under extreme pressure.  The result is that we must reduce our cost base across the business in order to continue producing the high quality products that our customers on the Island and further afield expect and deserve.”

Mr Macleod continued: “Our staff are our most valuable asset, for their commitment, knowledge and skill and so I will be sad to see any of them go.  However, we believe that it is now possible to reduce staff numbers by approximately ten posts without affecting the quality and range of products and service we offer.  We are hopeful that the majority of any redundancies will be voluntary.  We have consulted with staff and our recognised trade union.  Both have been very supportive during this difficult process.”

The reduction in staff numbers is only one strategy being pursued by the Creamery.  Mr Macleod explained: “This is part of a broader move to improve returns across the business.  For example, we are also currently reviewing our trading portfolio and have already had significant success in off-Island sales.  The more changes like this we can make, the less cost pressures will impact on our staff, so we are pursuing every avenue available to us.”

He continued: “Whilst redundancies are an unfortunate result of this review, we have to balance a number of wider priorities.  We want to continue doing our part to ensure the Island can be as self-sufficient as possible in its food supply.  We also want to protect the jobs of the remaining Creamery staff.  Finally, we have to ensure that the Island’s 38 dairy farmers receive the best possible price for their milk – without our milk supply there would be no Creamery.”