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Job losses in dairy industry: conditions on the line

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Ned K.

In April this year, two dairy industry manufacturing plants at Murray Bridge and nearby Jervois closed down. The two United Dairy Power (UDP) plants were owned by a Chinese Hong Kong based company, Five Star United Food.

The plants made cheese for the pizza market, butter, cream and milk powder and provided a reliable customer to about 100 local and South East of South Australian dairy farmers for many decades. The plants employed just under 100 workers all up, with some working there all their working lives. Five Star United Food went in to administration last October and up until April this year the plans were run by Administrators PPB. The main reason for the company folding was not the quality of the product or lack of markets for milk products, but Five Star’s inability to pay its profit hungry bankers the amounts they demanded.

According to the Fair Work web site, both plants had Enterprise Agreements which provided good wages and redundancy packages better than most large, fully union organised manufacturing plants.

PPB declared that all entitlements to workers would be met as should be. These entitlements were the result of years of struggle by these workers in their union, United Voice.

Between October last year and the closure announcement in April, workers lived in hope that the Administrators would find a new owner. There was no public interest or support shown by the SA or federal governments for securing the future of these plants and all they meant to the local community. Murray Goulburn food group stepped in and purchased vital cheese making equipment from the plants for use in its Victorian plants.

New Milk Factory Announced

Within two weeks of the announcement of the closure of the Murray Bridge and Jervois plants, Victorian based meat processing company, the Midfield Group, announced plans to convert a potato processing plant at Penola in the South East of South Australia in to a milk processing plant. The owner of Midfield Group, Colin McKenna, said that the plant would employ over 50 full time employees from mid -  2016 and pin its hopes on the huge market for milk powder in Asia, particularly China.

Premier of SA Jay Weatherill gleefully announced the plans for the new plant, saying:“We have identified premium food produced in a clean environment as a key economic priority for SA, and this project is a good example of the benefits that can bring”.

Unconfirmed reports say that Midfield Group were one of the companies that looked at the Five Star plants in Murray Bridge and Jervois but decided not to purchase these plants ready made for the export market of milk products.

One of the key factors cited by the Administrators PPB for the closure of the Five Star plants was the ‘cost of production’.

Will This Story Have A Sting For Workers In Its Tail?

This story of job losses and potential gains in 2016 in the same region in the same industry could have a sting for workers in its tail that is highly predictable under capitalism. Could it be that the plan by Midfield Group is to drive down wages and conditions in the dairy manufacturing industry in south east Australia by employing a low paid insecure workforce at the new Penola plant? From a capitalist point of view, a far more attractive proposition than buying two existing plants where workers were well organised and where they had maintained for many years decent pay and working conditions?

This has been a trend in the USA’s so called ‘revival’ of manufacturing with multinational companies closing plants where workers are organised and re-opening in the non - unionised ‘right to work’ States in the south of the USA.

This is a trend that is sure to be resisted by workers and their unions in the south east of Australia.

The new Penola milk processing plant may be an important testing ground for new battles between capital and workers in manufacturing industries in Australia.


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