Synlait's Auckland premises at Richard Pearce Drive, Mangere

Employees at Synlait’s Dunsandel site will find out within the next two weeks if they are among those expected to be made redundant. Synlait has about 1000 employees, but is expected to reduce its headcount by about 15%, which could deliver potential annual savings of $10 million to $12m.

Synlait’s owners include China’s Bright Dairy and A2 Milk. The original Dunsandel site remains the largest employer of the three New Zealand based processing sites. The restructuring proposal would be discussed with staff over the next two weeks and union before final decisions were made, said Synlait Milk Limited (Synlait) Chief Executive John Penno.

He said the aim was to realign its workforce to match new objectives and key business units, and clear away unnecessary obstacles within the organisation. “Synlait has been through a lot of change over the last 12 months. This means some areas are now over resourced, and some areas are under resourced. We need to review and reset the structure of our business to match our current goals to be successful.”

Synlait makes a range of dairy products, including infant formula. It has previously reported a build-up of stock, shipping delays, and market uncertainties affecting its outlook. Synlait will report its full year result on 27 September. In May it warned it was facing a significant full year loss of $20m to $30m.

Synlait has also just confirmed a sale and leaseback of its Auckland premises at Richard Pearce Drive, Mangere. Synlait Auckland forms part of the company’s North Island manufacturing network providing additional blending and canning capacity, warehousing, and office space.

Penno commented: “The opportunity to sell and leaseback the land and buildings at Richard Pearce Drive is attractive to Synlait as it will free up cash and allow us to pay down debt. The lease will have an initial term of 10 years, with further rights of renewal, providing plenty of long-term certainty and flexibility for our business.”

The sale price is $30.05 million, and the initial lease term is 10-years. Settlement will take place on 4 October 2021.

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