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All those lay-offs last month plus those in the coming months further cements Fonterra's position as a commodity producer. Value-add business requires a much greater level of staffing to operate, because it is more complicated and the customers are more demanding. This includes R&D, product development, engineering, process operation, product testing, product support etc etc
It will generally take about 3-5 years of expenditure before any value-add gains start to appear - a really tough sell to the farmers when they are getting such low returns
But while Fonterra continues to slash & burn employees, the current boom/bust will only continue
Question - why didn't Fonterra use some of the massive returns from 2 years back to invest in more value-add business? It would be close to baring fruit by now. Instead they invested in Beingmate who's shares have crashed (before the Shanghai melt-down) as profits dropped. Is this another lemon like Sanlu?
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