Barry Callebaut drives Centres of Excellence strategy
achieve production efficiency and maintain cost leadership within
the competitive cocoa market.
The strategy, which will result in a fully integrated and centrally managed operations unit, reflects Barry Callebaut's aim of being the preferred solutions provider from the bean to the shelf for the entire food industry. But as a consequence of the move, the Stollwerck factory in Cologne will be closed and further efficiency improvements are likely at other manufacturing plants.
Nonetheless, Barry Callebaut believes that its dedicated factory approach, which it calls Centres of Excellence, has proved successful, and has been a key factor in achieving cost leadership in the competitive cocoa market. This dedicated approach will now be extended across the entire manufacturing network.
This means that the group's more than 30 production facilities around the world, which were so far the responsibility of the respective business units, will be integrated into a centrally managed operations unit supplying all of Barry Callebaut's business units. The manufacturing of products will be concentrated, and each factory will focus on the products it is best suited for - in other words it will become a Centre of Excellence.
This, claims Barry Callebaut, will result in more specific expertise, longer production runs, and optimised stock and capacity management. Furthermore, the separation of operations from sales and marketing will allow the business units to fully focus on serving their specific customer segments.
It is hoped that the strategy will achieve greater efficiency in the face of recent difficulties. Stollwerck, a German subsidiary of Barry Callebaut, announced this week its intention to close its factory in Cologne, as of the end of March 2005.
Negotiations with the German Works Council on a balance of interest for the approximately 150 employees in production affected by the closure will start immediately. The European Works Council has also been informed.
Barry Callebaut says that the products made today in Cologne will be transferred to other sites operated by the group, primarily to the modern Norderstedt facility near Hamburg, which offers a production capacity of 30,000 tonnes compared to 7,000 tonnes in Cologne. This will result in the concentration of praline production in Germany at one dedicated factory.
The group says that the production transfer and the closure of the Cologne factory are fully covered by the CHF 80 million restructuring provision set aside at the time of the Stollwerck acquisition.
"We have reason to believe that the situation in Germany with a still weak domestic economy, strong growth of customer label products and increased price pressure on suppliers, will persist," said Barry Callebaut chief executive Patrick De Maeseneire.
"Furthermore, the situation in Germany might soon become manifest in other markets as well because the large retailers are expanding rapidly and consumers everywhere are showing a growing interest for quality at the lowest price. We are determined to tap into the strong market growth driven by the worldwide demand of the big retailers for customer labels, and we also want to benefit from the demand of the big branded consumer goods companies for molding and packaging.
"This is why we have decided to accelerate the implementation of our consumer strategy. We will work on two levels in parallel: tailor-made customer label solutions, extending from product development to sales support, and cost leadership."
In order to achieve further operational efficiencies, the group's three Swiss offices in the greater Zurich area - Barry Callebaut's head office in Dübendorf, Barry Callebaut Sourcing in Zug and Barry Callebaut (Switzerland) including the Chocolate Academy in Dübendorf - will be merged into one office in Zurich as of the beginning of 2005.
Zurich-based Barry Callebaut is the world's leading manufacturer of high-quality cocoa, chocolate and confectionery products with annual sales of €2.4 billion for fiscal year 2002/03 (closed on August 31, 2003). The group operates more than 30 production facilities in 20 countries and employs 8,500 people.
