Closure of Kißleg site in Germany

After careful consideration Arla Foods has decided that a continued operation of the Kißleg dairy site in Germany is not economically viable.

European dairy cooperative Arla Foods is to close its production plant in Kißlegg-Zaisenhofen in the German district of Ravensburg. The decision comes in response to a massive fall in prices and strong pressure from competition in international markets. The closure of the site on February 29th 2016 will affect 38 employees, who were informed of the decision at a staff meeting today.

“This was not an easy decision to take,” says Winfried Meier, senior vice president in Arla Foods Central Europe. “In recent months our experts have carefully examined and worked through a variety of options. Unfortunately it became clear that continued operation of the Kißlegg site was not economically viable,” explains Meier.

As a cooperative, Arla’s main aim must be to continue to pay a competitive milk price both to its farmer-owners and to suppliers in the Allgäu area. However, as Winfried Meier explains, this can only be achieved if Arla makes its business in the Allgäu area more profitable in the long term.

Winfried Meier is relieved that “we managed to reach an acceptable agreement with the Works Council”. Together with the Works Council and the NGG (Union for Food and Catering), a social plan and a balance of interests programme were developed which provide a fair solution for the 38 Arla employees in Kißlegg.

“We will do everything possible to ease the situation for our employees,” states Winfried Meier. This includes the opportunity for the Kißlegg workforce to apply for one of 19 jobs which Arla Foods is offering to employees mainly in the Allgäu area but also at other locations.

The background for the closure is a fall in demand for the hard cheese called “MonRocco” produced in Kißlegg.

“Over the past three years, competition has intensified dramatically. In Eastern Europe in particular, “MonRocco” can be produced much more cheaply than is possible at the Kißlegg site,” explains Meier. "Recently, opportunities to sell this product and still cover costs have been severely restricted. The cheese shop attached to the plant will also be affected by the closure," he says.

“For us, the Allgäu is an important area for Arla Foods,” says Winfried Meier, and therefore the Bad Wörishofen, Sonthofen and Wertach sites will be better used in future. The aim is to run these sites at full capacity so as to improve and support the marketing of special milk. In addition, as already announced, Arla’s range of products will be extended. From early 2016, the Arla Foods local brand “Allgäuland” will be available in shops again. Initially, milk and a few other soft cheese and butter products will be marketed under this well-known brand. For the most part, the Allgäuland concept already matches the existing approach. “Allgäuland” is a regional brand with national marketing potential.