Danish Crown Group CEO Kjeld Johannesen attributed the action to ongoing efforts to tackle over-capacity. "We tried to persuade Danish Crown to take a different course. We had hoped to avoid this situation, but in the end, the company stayed with its original plan," said Thygesen.
The Faaborg closure of de-boning and ready-made meal production, which will result in 475 redundancies, forms part of a broader project to deal with over-capacity and restore competitiveness, margins and profitability, said Jesper Friis, director of Danish Crown’s pork division.
"We need to address all key components hindering our meat processing operations and competitiveness," Friis said, adding that production costs at Danish Crown factories in Skærbæk and Bornholm are currently being examined with a view to a rapid restructuring of these facilities.
The likely outcome of plant reappraisals in Skærbæk and Bornholm is that Danish Crown will pursue significant cost savings and up to 350 redundancies, said Flemming Ibsen, a labour market analyst with Denmark’s Aalborg University. "What is happening in Danish Crown is reflective of the meat industry in Denmark as a whole. Solutions are possible to prevent further large-scale dismissals, but only if unions agree to pay cuts for workers as has happened in other companies, such as Scandinavian Airlines, recently."
A fundamental challenge for Danish Crown is to regain a strong competitive footing by finding ways to reduce the cost-base in its meat processing factories and in animal transportation, said Friis. The per-kilogram production cost of pork varies widely between Danish Crown’s factories across Denmark, and particularly on the island of Bornholm, he added.
Nærings- og Nydelsesmiddelarbejder Forbundet (NNF), Denmark’s meat processing and food production trade union, described the redundancies at Faaborg, and the impending lay-offs at Skærbæk and Bornholm, as a "potential disaster" for the meat industry in Denmark. "What Danish Crown has done is send the worst possible message to the industry. We need to work together to find long-term solutions to ensure we are not facing a rash of closures. We must stop this epidemic now, and start thinking outside the box to find concrete solutions if the Danish meat processing industry is to survive," said Ole Wehlast, NNF’s president.
Danish Crown’s decision at Faaborg should have come as no surprise to the meat industry or trade unions, said Ibsen, as the company’s decision to shut down its meat processing plant in Esbjerg in August 2012 was a clear signal of intent.
"Meat producers and unions held many meetings with government officials in the second half of 2013 and gave clear warnings then of potential redundancies. State support was sought to bolster the sector’s competitiveness. In its defence, Danish Crown did offer a four-year job guarantee in return for a 6.4% pay cut, but its 6,000 unionised workers voted against it by a 60% majority, despite general union support for it," Ibsen said.