Danish Crown, Europe’s biggest pork producer, is to close one of biggest abattoirs in Denmark.
The proposed decision to close its abattoir in Ringsted will result in the loss of almost 1,200 jobs. However, the company said approximately DKK 250 million (£27m) will be made available for other investments over the next three years, which is expected to create up to 300 new jobs in Horsens, Herning, Vejen and Blans near Sønderborg.
Danish Crown said it was responding to what has been a challenging two years for Danish slaughter pig production, with the supply of fewer pigs for slaughter in Denmark making it difficult to maintain efficiency levels at the group’s Danish abattoirs.
The co-operative has, therefore, decided to reduce the number of its production sites in Denmark and concentrate the group’s future investments, with the aim of processing its owners’ pigs into products such as bacon and pepperoni rather than primarily being a supplier of raw materials to customers worldwide.
This includes, as the first ‘major step’, investing almost DKK 1 billion (around £100m) in a new and state-of-the-art bacon factory near Manchester in the UK, where the factory’s annual production of more than 200 million packets of bacon has already been sold to three large British customers.
Danish Crown said the changes will consolidate its position as the leading meat-based food company in Europe.
Jais Valeur, Group CEO at Danish Crown, said: “It is a heavy decision to close the abattoir in Ringsted, and especially to say goodbye to so many skilled and well-liked colleagues, but it is a necessary measure in our efforts to develop Danish Crown’s position as a modern food company. In making these changes, we are doing all we can to improve efficiency at the abattoirs and sell many more processed products to our key European customers.”
Since 2021, the number of pigs being sent for slaughter in Denmark has, however, declined significantly, making it necessary to accelerate the company’s transition and ‘streamline production even more in order to be able to pay the company’s owners – Danish farmers – a competitive price for their animals’. Danish Crown said its ambition is that the cooperative owners’ meat must either be sold as processed products or exported as semi-finished goods to high-price markets.
Mr Valeur added: “The global pork trade has changed significantly in recent years, and the market for exporting pork for processing around the world is now dominated by Spain, the USA and Brazil. On the other hand, we see a potential for processed products, with the European market in particular showing considerable interest in the bacon and pepperoni being produced by Danish Crown.”
New stability tool
In consolidating its Danish abattoir activities at fewer facilities, Danish Crown’s capacity will be very precisely adapted to the number of pigs which the cooperative owners have pledged to deliver in the coming year. On a daily basis, this is referred to as the ‘A volume’.
Danish Crown is now activating its stability tool ‘in an upward direction’, which means that the cooperative owners can no longer continually increase their A volume. Instead, the agreed volumes are locked, so any changes require a notice period of 12 months. At the same time, a stability deduction will have to be paid if deliveries fluctuate by more than what Danish Crown’s rules permit.
“It’s imperative that something happens now, and we’re ready to use all the means at our disposal,” said Asger Krogsgaard, Chairman of the Board of Directors of Danish Crown.
“During the past 20 years, we have repeatedly either ramped up or reduced our capacity, either by taking on or laying off hundreds of employees. Paying overtime, training new employees and ensuring we have available capacity are horribly expensive, and it costs millions of kroner each time.
“Therefore, we are now doing all we can to stabilise the cooperative owners’ regular deliveries of pigs, because this is one way in which we can pay the owners a competitive price that matches what is being paid in Europe.”
Last week Danish Crown presented a model that makes it possible for piglet producers to become cooperative owners.”