Melbourne gets $22m Fonterra R&D base

Fonterra is to move about 25 jobs across the Tasman when it opens a $22 million research and development centre in Melbourne early in 2007.

But there are no plans for redundancies at its New Zealand R&D facility, Fonterra's director of innovation, Bob Major, said yesterday.

The decision to build a new facility in Australia was about growth, not about reducing activity at the Palmerston North innovation centre, he said.

Tax breaks from the Victorian Government have also helped Fonterra settle on Melbourne as the site for the new facility.

Neither Fonterra nor the Government was prepared to give the value of those tax breaks yesterday.

It will cost $16 million to build the facility but, by the time it is fitted out with scientific equipment, Fonterra will have invested $22 million.

The centre will employ 150 people when it opens in April 2007 and cost $30 million a year to run.

Major said the tax breaks and logistical support were a secondary factor in the decision.

Fonterra had looked at many potential locations around the world before settling on Australia.

There had also been talks with the New Zealand Government about further investment in this country.

But Melbourne was chosen because it fitted with Fonterra's strategy of becoming the number one player in the Australian dairy industry.

Victoria is Australia's biggest dairying state and Fonterra has already established itself as a key player there. In August, it completed a full takeover of the state's dairy co-operative, Bonlac.

A Melbourne research unit will also give Fonterra the opportunity to apply for Australian Government research grants.

Major said there would also be private partnerships.

The first project would be with rival dairy co-operative Murray Goulburn and would investigate the heat and activation of bacteria in raw milk.

The Melbourne centre would work on projects to develop Fonterra's global brands business. It would also focus on new food services products - to meet the needs of chefs and commercial kitchens.

Major said he did not expect any jobs to be lost at Fonterra's Palmerston North research facility but he did concede that about 25 positions were likely to be transferred across the Tasman.

A recruitment process would be undertaken and people would be given the opportunity to apply for the jobs in Melbourne.

Plans for the new facility were unveiled in Melbourne yesterday by Victoria's Minister for Regional Development and Innovation, John Brumby.

He described Fonterra's decision as "a big win" for Melbourne.

The specialist dairy facility was the first of its kind in Australia and added to Melbourne's reputation as the "innovative and creative capital of Southeast Asia".