CBH job cuts in long term cost saving exercise

29 Oct, 2015 09:24 AM
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15
 

UPDATED

HARVEST operations will not be affected by the announcement CBH is to cut 60 jobs from its business, but growers may experience impacts in other dealings with the co-operative.

The announcement was made to staff and growers yesterday as a part of initiatives to save $25 million in the business over the next two years.

Also affected by the announcement will be CBH's Better Farm IQ program and possible the sale of subsidiary company Lupin Foods Australia.

CBH chief executive officer Andy Crane said it was a "tough week" for the business and support would be provided for existing staff and those who will leave the business through career transition support and counselling.

"It’s tough for the business, both people who are leaving and indeed for those that remain we know that it has a major impact on them as they lose friends and colleagues," he said.

"So our aim is very much to focus on caring, being open and transparent and respectful through this process."

Dr Crane said the changes announced yesterday were the first in ongoing efforts to make operations more efficient and reduce the dollar per tonne charged to growers.

"As we try to save $25 million over the next two years head count will be only a proportion of that and not indeed the larger proportion of what we will do," he said.

"The larger proportion will be from other savings across the business.

"We’re looking at pretty much everything from procurement, fleet, anything and everything we can do to have a material impact on the dollar per tonne charged to growers for the use of the supply chain."

Dr Crane acknowledged freight costs were a concern for CBH as growers paid more than Eastern State and international counterparts.

"The business operates to a measure set by the board of the dollar per tonne charge to growers minus rebates from other businesses," he said.

"That focuses us on the cost of the supply chain between the paddock all the way to the international market place.

"The growers own CBH and the best way we can keep growers competitive, where we can’t influence everything... but we can influence the cost of that supply chain."

Dr Crane said the purchase of the CBH fleet of trains was a strategic cost to push down freight charges, but access fees charged to CBH by rail leaseholder Brookfield Rail were also a concern.

"We’ve brought a material change to freight rates in that respect, but clearly we’ve been very consistent that the access fee we pay has also been going up and going up steeply and mopping up many of the savings that we are making," he said.

"So we will continue to make sure that part of the supply chain is a focus as we should be paying a competitive rate, comparable to the Eastern States and growers around the world as that’s who our growers are competing with."

Network optimisation through bin closures, upgrades and pathways to port is also a cost saving area in CBH's sights and this topic has been discussed at the 90 pre-harvest grower meetings held by the co-operative.

"We’ve got some strong feedback from growers about the need for change and understanding of the sorts of things that would change," he said.

"That’s part of the consultation with members and we will be bringing that back to the board for their consideration.

"As much as it would immediately focus on bin numbers and where they are that is only one part of why growers pay what they do.

"The efficiency of the being able to outload onto truck or train, investment in path to port, investment in ports, number of sites we have, how old they are and how we maintain them is being considered.

"It’s a highly complex piece of analysis for us to say to growers it's in their interest that the network looks like this.

"The vast majority of growers understand the need for change and ultimately we’re only going to bring to the board and only going to approve something in the growers’ interests.

"No decisions have been made about specific sites."

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READER COMMENTS

Mock Junro
29/10/2015 10:14:06 AM, on Farm Weekly

Has this got anything to do with trying to hide tens of millions of dollars lost in trading? Where is my Marketing and Trading rebate? Or is this CBH realising that they are too bloated and inefficient to survive in this competitive landscape. Once again, the CBH propaganda office hides the losses, and focuses on the future savings from redundancies. Will sacking 60 people save the CBH network? Or is this just a house of cards?
Deregul8
29/10/2015 11:56:03 AM, on Farm Weekly

And Andy can you please tell the shareholders what the annual spend of advertising and public relations has been for the last financial year. And what about the cost of having multiple full time staff implementing the intell ops for th GRID headache? Spin isn't matching the reality of costs within your structure.
Farmer
29/10/2015 2:54:50 PM, on Farm Weekly

So there you have it Jock Munro, WA grower freight costs are higher than the eastern states...straight from the mouth of Andy Crane, CBH Chief Executive and what's more costs only have one way to go after reading this article.
X
29/10/2015 2:56:22 PM, on Farm Weekly

When are the Board going to enact Management recommendations re network revitalisation/ rationalisation, and drive some real operational / logistic and transport efficiencies.. It's obvious some regionally elected Direcors are reticent to resolve an issue that has been around for 10 or so years because they fear they will not be re- elected. I would ask the question, are all CBH Directors acting in the best interests of the Co -Ops future?. Hard questions need serious answers
drowning in debt
30/10/2015 7:55:19 AM, on Farm Weekly

a $10million loss on their trading desk when they have complete inside information of quality and stocks????? word has it their malting forward sales are going to cost serious dollars this year as only feed barley coming in, literally 99pc of deliveries
boris
30/10/2015 9:02:00 AM, on Farm Weekly

CBH has grown off the back of productive farmers like a bureaucracy grows off the back of a productive society. The question that needs to be asked is why were these people employed in the first instance, if their jobs are so easily made redundant? CBH spends money like a bunch of farmers sitting around a shire council with no accountability then blames everyone else when competition starts hemorrhaging tonnes. Plus to top it off the new GRID system that is meant 'to enhance the relationship with growers' is dysfunctional and causing untold damage to this 'relationship'. CBH is rudderless!
kevin
30/10/2015 9:38:27 AM, on Farm Weekly

When looking to cut cost, start at the top is always a good idea.....lol
Consolidated
30/10/2015 10:13:38 AM, on Farm Weekly

"Dr Crane acknowledged freight costs were a concern for CBH as growers paid more than Eastern State and international counterparts." There you have it folks. We are getting screwed and the average grower is none the wiser.
boris
30/10/2015 11:12:30 AM, on Farm Weekly

Dr Crane is far too focused on the access fees CBH pay Brookfield. He should focus on the fobbing fees that he continually increases, which are far in excess of the competitions and subtracted every day from the grain bids to the detriment of growers. The growers value in CBH is NOT being returned, it is vaporizing under the Newman/Crane regime. Change is desperately needed!
Beacon Boy
30/10/2015 11:55:39 AM, on Farm Weekly

been a lot of advertising on GWN television last 12 months. how much does that cost?? don't need adverts, need cost savings. we are getting stung up. trains with no train tracks. top heavy management structure. trading losses. what next? writedowns on Asian investments. what happened to our investment at Newcastle. 3rd year of drought over there. debacle!!!!
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