UP TO 140 jobs face the axe at the Peters and Brownes plant in Balcatta, WA, after New Zealand dairy giant Fonterra announced it is selling its WA ice cream businesses to confectionery giants Nestle and Bulla Dairy Foods.
Nestle will acquire the Peters brand in Western Australia and the Connoisseur ice cream brand, while Bulla will acquire the license to manufacture and market the Cadbury ice cream range in Australia.
Under the plan, the Peters operation in WA will eventually move to the eastern states and the Balcatta ice-cream making site will close.
In a statement issued today, Fonterra expressed "regret the impact these decisions will have on our people" at the Balcatta factory.
"Given Nestle own the Peters brand in all states except Western Australia, they are the logical owners of the brand in Western Australia and the decision to sell the Peters brand to Nestle ensures Peters remains a strong vital brand in Western Australia," Fonterra Australia and New Zealand managing director John Doumani said.
The arrangements, which are expected to take effect at the end of June, will see Nestle consolidate the manufacturing of the Peters and Connoisseur brands at its Mulgrave facility in Victoria, a move that renders the Balcatta facility redundant.
In conjunction with Nestle's acquisition, Fonterra has agreed to sell its remaining ice cream business in Western Australia to Bulla.
The arrangement will eventually see Bulla producing the Cadbury ice cream brand in its Victorian facilities.
In the interim, Fonterra's Balcatta site will continue to produce this range.
However, the company admitted that potentially up to 140 positions will be made redundant at the Balcatta site.
"We regret the impact these decisions will have on our people and we are doing everything possible to minimise the number of people affected by this announcement, including pursuing redeployment opportunities within Fonterra and employment opportunities with other companies," Mr Doumani said.
"We have in place a comprehensive program to assist impacted employees, including outplacement support and counselling.
"The redundancies will be phased over a period of time.
"We have endeavoured to provide as much notice as possible to our people and will be as flexible as possible to meet individual needs."
Fonterra's New Zealand ice cream business, Tip Top, and its remaining WA dairy business are unaffected by this announcement.
Separately, Fonterra has announced its intention to undertake a strategic review which will seek to maximise the value and sustainability of its non-core regional liquid milk businesses in Australia, but Mr Doumani was quick to assure Fonterra's WA farmer suppliers that today's announcement had no impact on their milk supply arrangements.
"We collect over 130 million litres of milk in Western Australia annually and our growing Brownes brand portfolio will continue to require this secure supply of fresh high quality milk to produce its market leading, innovative products," he said.