Raisio margarine shake up leads to job cuts

By Anthony Fletcher

- Last updated on GMT

The codetermination talks Raisio began in early September have been
concluded, according to a company release to the stock exchange.

The finalised codetermination talks are part of the Finnish food group's rationalisation programme, which is designed to help the firm meet the challenges of a tightening competitive environment, especially in Finland.

This means job losses. The Finnish food group said that margarine production would be adjusted through lay-offs, which have a labour effect of some 25 men years.

As a result of the reorganisation of the food division and the rationalisation of group services, 24 employees will be made redundant.

An additional seven jobs will be cut through retirements and other arrangements and some 10 temporary employments will be ceased.

Raisio said that the job losses would result in cost savings of €5 million on an annual basis. A cost provision of €700,000 will be made in the third quarter result of this year.

The food firm has been under pressure. Last month it downgraded its expectations for full-year 2006 following the weak performance of its Finnish, Swedish and Russian food businesses the costs of restructuring.

The company stated that operating result excluding one-off items for the group will be "clearly"​ lower than 2005's €9.1m.

Taru Narvanmaa, executive vice president of communications, has attributed the slow growth in part to intense competition in markets such as margarine. The company has also found it difficult to find a suitable market for its new soy and oat products, and sales have been limited to the domestic (Scandinavian) market.

Hence the restructuring programme. As part of this, the company has initiated several other projects targeted at increasing efficiency and reducing working capital.

The capacity expansion in the stanol ester plant in Finland for example should enable all European Benecol ingredient deliveries to be handled from the Raisio plant, reducing production in the US plant. This will results in a reduction of 15 employees in the US plant.

Raisio has also decided to close down the Viikki research centre in order to centralise work in a new R&D centre completed earlier this year.

"This operating model will better serve the needs of the various businesses and also bring along some cost savings,"​said the company.

After the reductions the number of employees in Raisio Group is some 1,300.

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