What Would Synlait Be Worth to Fonterra or a2 Milk?
Speculation of a possible joint move by Fonterra and a2 Milk to buy Synlait raises a much bigger strategic question, says agribusiness expert Dr Nic Lees.
The temporary closure of the iconic dryer, known as 'P1', will see more milk turned into a range of high value products, including milk protein concentrate which is currently in high demand.
Fonterra managing director global operations, Robert Spurway says P1 has served the business well over the years but is coming to the end of its lifespan.
"P1 was one of the country's flagship dryers when it was first opened in 1973, and has been an important part of our asset mix ever since. Over its 43 years, it has produced more than half a million metric tonnes of milk and protein powder," says Spurway.
"However, as technology advances and markets continue to evolve, so too must our cooperative. We are constantly honing and improving our asset base in order to maintain operational excellence, achieve greater efficiencies and deliver on our value add strategy."
The P1 building will remain on the site, giving the option to re-open the plant in the future to help meet milk growth in the central North Island. Staff from the plant, as well as its machinery and technology, will assume new roles across the site's nine other plants.
This project is part of a business-wide review to identify efficiencies and ensure the cooperative is well-placed to respond in an increasingly volatile and competitive environment, says Spurway.
"We have a responsibility to our farmer shareholders and our customers to be more efficient in all facets of our business, and projects like the one at Whareroa are helping us to identify areas where we can make significant and sustained cost savings."
