Alliance merges two meat plants

By Philippa Stevenson and NZPA

Three of the four big meat companies have now announced plant rationalisation in moves described as the most dramatic since the closures of a decade ago.

The fourth company, Dunedin-based PPCS, is expected to match its rivals' manoeuvres within weeks.

Yesterday, the South Island Alliance Group said it would merge two of its three Southland meat plants, Lorneville and Makarewa.

The decision followed similar rationalisation in the North Island last week by Richmond, and in February by Affco.

PPCS chief executive Stewart Barnett declined to comment on his company's plans. An announcement could be made in the next fortnight.

"The industry will continue to evolve, not quite like the 1980s, but there will be change," he said.

Alliance chairman John Turner said the merged plants would employ more than 2000 people and few, if any, meatworkers would lose their jobs. But up to 30 salaried, trades-related positions would become redundant.

The Meat Industry Association executive director, Brian Lynch, said that although the industry changes were dramatic, there was a big difference from the closure of nine, large multi-chain plants between 1987 and 1991, which cost 16,000 jobs.

In comparison, this year's changes involved minimal disturbance for workers, their families and communities. The reason was the transformation in recent years to a "leaner, more efficient, more customer-focused meat industry," he said.

A decade ago, the national sheep flock was 60 million, average lamb weight was 13.5kg, and plants processed 3000 lambs a day, using up to 50 workers.

"That's about 70 lambs per worker per day. We relied on Britain to take two-thirds of our lamb exports, and about 80 per cent of what we shipped abroad, about 260,000 tonnes, was frozen carcass wrapped in a muslin bag."

Today the flock was 46 million, average lamb weight had risen to 15.8kg, and multi-shift plants processed more than 5000 lambs a shift. That meant workers had more than doubled their output and the industry exported 278,000 tonnes of chilled and frozen lamb products.

Mr Barnett said changes had also been brought about by the competition for land use, and longer production seasons.

Mr Turner said the only way to halt the land-use switch was to improve returns to livestock producers.

Alliance was already introducing new products into the market and new markets were being sought. But a reduction in processing cost was also necessary.

In $5 million worth of changes and upgrading, the merged Alliance plant will operate from the Lorneville site, processing all sheep meat previously processed at the two sites.