It is of no consolation to the workers involved, but the job-cutting programme at the Avonmore Waterford Group (AWG) was first signalled several months ago when the merger between Avonmore Food and Waterford Food was first mooted. Some kind of rationalisation was always likely; but the scale of the job losses - which has come as an unwelcome surprise for many workers - is a forceful reminder of intense competition in the international dairy processing market. Citing excess capacity and duplication of resources, the company will retain only about half of its existing liquid milk and milk processing plants in Ireland. In all, over 1,200 jobs will be lost; 750 in Ireland and another 550 in Britain. The company has promised a relatively generous redundancy scheme which will see employees of 20 years' service receive about £57,000. In conjunction with Forbairt, it has also established a £7.5 million fund and a special task force to help find alternative employment for the areas affected. For many Dubliners, the closure of the Premier Dairies plant at Rathfarnham with the loss of 200 jobs will mark the end of an era. The plant, apparently, is, in part, a victim of the traffic chaos in Dublin, responsible for significant additional transport and distribution costs. Elsewhere, the company will retain about 120 jobs in an administrative centre in Dungarvan, Co Waterford but its decision to close its dairy processing plant in the town will still be keenly felt, as it was one of the main sources of employment in the area. There will be considerable bitterness in the south-east that many of the rationalisation measures are biting in the hinterland of the former Waterford Foods co-operative.
The rationalisation plan is expected to cost the company some £159 million in the current year although it can expect cost savings totalling about £60 million by the end of 1999. It may be that AWG is wise to begin the process of rationalisation quickly; undue delay would inhibit the company's longer-term plans. Avonmore Waterford is, indeed, a very major player in the international dairy market - the fourth-largest dairy processing company in Europe and the seventh-largest in the world - but its power-base should not be exaggerated. The company must legislate for increased competition in the international dairy market from much larger multi-nationals and intense competition from smaller, but leaner, operators in its domestic markets. More fundamentally AWG, like all companies in the food sector, is faced with the likelihood of reduced supports from the EU. Pressure for deeper cuts in these supports is expected to dominate both the next phase of CAP reform and the next round of the world trade talks. On balance, it is better for the company to move now to create a competitive base than to wait until radical change is forced upon it by market conditions. There is also the not insignificant question of protecting and consolidating the jobs of the 10,000-plus employees who will remain with the company.