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Uncertainties at Danish Crown Lead to Layoffs

by 5m Editor
18 February 2009, at 8:17am

DENMARK - Danish Crown’s Pig Production Board Committee has proposed the closure of some of the group’s Danish activities.

The facilities affected are the slaughterhouse in Holstebro and the cutting department in Rødding. The closures will affect 463 Danish Crown employees in Holstebro and 308 Danish Crown employees in Rødding. Furthermore, 90 employees will be affected at the shoulder deboning department in Esbjerg, which is expected to close in the first week of May. Holstebro is expected to be closed in the second week of June and Rødding sometime during 2009.

The decision is influenced by a number of factors which have, among other things, led to a fall in the supply of pigs for slaughter. Uncertain framework conditions for both primary production and the company – including a lack of environmental approvals, significantly increased veterinary costs and the uncertainty surrounding the consequences of the Danish Tax Commission’s proposal – together with the economic downturn and high cost levels in Denmark have led to a need for adjusting capacity at Danish Crown.

CEO of Danish Crown, Kjeld Johannesen, says that the company is hoping that market conditions will improve, aside from employees understanding the need to mitigate the politically created challenges. He said, "We have therefore decided to propose the closing of Holstebro with the possibility of re-opening the slaughterhouse within the first year. This is the only financially responsible thing we can do. We are monitoring the framework conditions which will define future pig production with great seriousness at the moment."

Recent pig counts seem to suggest a further decrease in slaughter pig production, and the current very uncertain economic situation has compelled Danish Crown to take this step to secure its competitive position.

"Our competitive position in relation to export markets has been improved compared to the pressure we were exposed to last year. We see improved sales opportunities in attractive markets such as Japan, Australia, China and the USA. However, with the decreasing slaughter pig production in Denmark, it is imperative to be one step ahead and to adjust costs in order to be able to operate in the international markets," said Mr Johannesen.

He pointed out that this is one of several necessary steps in order take to improve the competitive position for Danish Crown as the company goes forward.

Part of production in Rødding will be transferred to the department in Esbjerg, and from there part of production will be transferred to Germany. This means that Danish Crown expects to be able to save approximately a quarter of the affected jobs.