ABOUT 200 people out of a total workforce of 700 could be made redundant as part of a rationalisation programme at the Tallaght biscuit manufacturer, W.& R. Jacob.
Announcing a 13 per cent contraction in operating profit to £5.638 million, Jacob's managing director, Mr Bill McConnell, yesterday said the group has to be "leaner and fitter" to face future competitive pressures. Some £25 million is to be invested over the next three years to further streamline production. The company was taken over by French food group, Danone, in 1991.
The redundancies, he said, would be voluntary and should be completed within a three year period. Around 100 would come from the production area, 30 from distribution and the remainder from technology and administration. The net job loss to the economy would be less than the 200, he said.
The company was moving out of non core areas such as cleaning, transport and engineering and would be seeking to place some of those made redundant into these areas, he said. Also, considering the age profile, Mr McConnell expects a number of people to seek early retirement.
He would not be drawn on the extent of the redundancy costs. Negotiations are taking place with the union, he said.
The rationalisation programme will he added, be on a phased basis.
Mr McConnell noted that the longer term objective is to make the company more efficient so that it can secure more business. There are plenty of opportunities, particularly in the British market, he added. But first, costs have to be brought down to a level in which the group can compete effectively with the international groups, according to Mr McConnell.
Danone received a dividend of £5 million from Jacob in 1995. This was more than the £3.5 million net profit generated, so the Tallaght company had to dip into reserves to make the payment. This is reflected in the drop in shareholders' funds from £34.3 million in 1994 to £32.6 million.
The intensity of competition, compounded by the strength of the pound to sterling, is reflected in the latest results. While sales increased 2.7 per cent to £83.4 million in 1995 operating profits contracted. Profit margins narrowed from 8.0 per cent to 6.7 per cent.
Mr McConnell described it as a "difficult year for the biscuit industry". The markets for biscuits in Ireland and Britain, adversely affected by the warm summer weather, fell by 2.0 per cent and 2.5 per cent respectively. The effective devaluation of the Irish currency to sterling "gave our competitors, most of whom are based in Britain, an added advantage", Mrs McConnell said.
Nevertheless, the company said it increased its market share for its key brands in the home market as a result of a significant increase in marketing expenditure. It was helped by the reintroduction of its chocolate packets and Club Milk products.
Export sales continue to grow at a fast rate. They now account for 40 per cent of total sales, up from 25 per cent in 1994. The company is also continuing to benefit by selling through the Danone group.
Jacob continued with its programme of investment in upgrading its manufacturing facilities. It spent £5.9 million on capital development last year. This included the cost of a new creams plant which will supply the British and European markets.
The latest accounts showed restructuring costs of £1.5 million for 1995. This was at a similar level to the costs incurred in 1994.
