The Victorian Government has pledged to support workers, but Gippsland leaders are condemning the decision by Saputo to close the Maffra dairy processing factory and powdered milk lines at the Leongatha facility as part of the international corporate’s rationalization plans.
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Looking for solutions after closure
The Murray Goulburn factory at Maffra (background) after it was bought by Saputo, and before it was rebadged. In 2017, Saputo agreed to maintain agreements with MG suppliers for five years after its purchase.

The rationalisation decisions will be effective in early 2023.

The decision by Saputo to reduce its activity in Gippsland comes on the sunset of an agreement it made to continue to buy milk from Murray Goulburn’s existing suppliers, when it bought the failed cooperative in 2017.

That agreement, under the terms of the sale and purchase agreement, is void at the end of this year.

The dairy industry in both affected regions are key contributors to the local and state economy.

Milk supply out of the Macalister Irrigation District in Wellington Shire, which the Maffra facility traditionally processed, makes it the third largest dairy region in Victoria.

Wellington Shire Mayor Ian Bye condemned Saputo Australia for its unwillingness to discuss its plans with the council, but pledged to work with Saputo management.

“(The November 9) announcement is disappointing in that there has been no discussion with the community or council to leverage other opportunities, or consider responsible transition of local employees,” Cr Bye said.

“If you ask anyone in Maffra, they’ll tell you how important Saputo was for the region. It has been an integral part of the community, and it’s now time for us to look at transition options for the future.

“As a council, we are confident that with a number of different sectors looking for workers, we can start a conversation with Saputo and work towards a solution to benefit everyone involved.

“While Maffra is a resilient and growing community, this decision by Saputo to close the factory brings to an end an important economic and community piece of Maffra’s history that stretches back decades.”

Collectively, the dairy industry in South Gippsland Shire is directly worth about $1 billion annually, and is the single biggest employer within the region.

More than 900 people, or 6.7 per cent of all people employed in the shire, are within the dairy industry, with another 500 employed in dairy processing.

The value of the dairy industry in South Gippsland Shire has a significant flow-on economic benefit through other industry sectors to the rest of the economy.

South Gippsland Shire Council CEO Kerryn Ellis was disappointed to hear that processing operations would be scaled back, and job losses would occur, at the Leongatha dairy factory.

Both South Gippsland and Wellington shire councils have pledged to work with Saputo management to help workers affected by Saputo’s rationalisation plans.

Federal Member for Gippsland Darren Chester said he was disappointed that Saputo Australia made the news of the closures public in the lead-up to Christmas.

“The Maffra community is extremely resilient and I know it will overcome these challenges, but that doesn’t soften the news for staff and families directly impacted by this decision,” Mr Chester said.

“I will be working with the community, Wellington Shire Council and other levels of government to secure more investment in infrastructure and services to boost the local economy.”

He also commended the long history — more than 100 years — that Maffra had hosted a dairy processing factory, creating local jobs and supporting milk suppliers in the region.

State Member for Gippsland East Tim Bull said it was a disappointing announcement for Maffra and the local community, with no forewarning from Saputo Australia.

He is hopeful the infrastructure will attract new investors, if Saputo intends to sell or lease it.

“This [decision] has occurred in a period where we have workforce shortages across other sectors and industries that I am hopeful those people impacted can transition to,” Mr Bull said.

“I am also planning to discuss the future of the site and prospective new industries and uses with Saputo and agencies like Wellington Shire Council.

“It is a resilient and growing community that will continue to prosper.”

The Victorian Government has committed to supporting the local communities.

“We are ready to help affected employees and will continue to support new investment and job creation in Gippsland,” a government spokesperson said.

Saputo has said it would work closely with affected employees to consider redeployment and retraining opportunities, or if suitable roles were not available, employees would receive severance and outplacement support.

The company said many of the impacted production and packaging functions at the facilities would be absorbed or integrated into its other facilities.

“While a very difficult decision to make, (this) announcement continues our journey towards long-term success for our business in Australia by increasing our efficiency and productivity, and making our business more competitive,” Saputo (International and Europe) president and chief operation officer Leanne Cutts said.

“These strategic steps taken to further streamline our network aim to leverage SDA’s broader manufacturing network capabilities while creating synergies to maximise the return on every litre of milk.”

Saputo said it did not expect the changes would affect suppliers.

Earlier this year Saputo closed its cheese slice line at the Cobram factory in northern Victoria and in September said it was looking at rationalising its Australian dairy factories in its implementation of a new, four-year global strategic plan.

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