Drought forces Namoi Cotton to slash 50 jobs

Namoi Cotton cuts 35pc of workforce in drought-forced restructure

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Namoi Cotton reduces head office numbers by almost half and restructures ginning and grower services jobs in NSW and Queensland.

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Drought has forced Namoi Cotton to cull about 50 staff across its NSW and Queensland network and further cut cash flow expectations for the 2019-20 trading year.

Almost half the full-time job cuts have been made to the company's head office ranks, while restructuring across the company will see ginning and grower services positions combined in cotton growing districts.

Until this month Namoi employed about 130 permanent staff, which means the cuts represent more than a third of its remaining workforce.

The former grower co-operative's registered base is at its original Wee Waa home, but the company is largely run from Toowoomba in southern Queensland.

Meanwhile, as planting expectations for this summer's crop continue to shrink, the company's cash flow for the year to February 29 is also tipped to slide $3 million into the red.

It was previously estimated to be in the range of $2.5m to -$2.5m.

We are certainly in drought management mode, at the moment, but we've tried to retain core skills which relate to servicing customer needs - Michael Renehan, Namoi Cotton

The major organisational restructure will see the cotton ginning and marketing company save about $4.5m in annualised labour costs in what new chief executive officer, Michael Renehan, said would be a significant, but once-only reduction in staff levels.

The restructure and staff cuts, which began about three weeks ago, will cost Namoi about $2m.

Mr Renehan said management was well aware the big changes came at a difficult time across the bush and therefore considerable time had been spent consulting with staff about the best structure options and organising employee assistance structures before the plans were implemented.

He was also in North West NSW this week talking with growers who wanted assurance redundancies in their communities were "done appropriately" and opportunities for other work were followed up.

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The cuts come close behind southern NSW-based SunRice being forced to take similar redundancy action, laying off about 100 staff.

SunRice has cut its ranks to just one shift at the Leeton and Deniliquin rice mills because the coming Riverina crop will be well below last autumn's 54,000 tonne harvest.

Farm machinery industry companies and other farm service sector providers have also scaled back staff numbers and working days across drought-whacked eastern Australia.

However, Mr Renehan said Namoi's full service capability to the drought-diminished cotton growing sector would continue to be offered to farmers and buyers in the coming season, with a stronger focus on grower-facing and market customer activities.

Michael Renehan

Michael Renehan

Gin managers' roles at its 12 gins will now be more aligned to working with grower customers to help regulate volumes and logistics between farms and cotton gins and help farmers save time and costs, too.

Administration processes were also being streamlined.

"We are certainly in drought management mode, at the moment, focused on reducing fixed costs as much as possible, but we've tried to retain core skills which relate to servicing customer needs," Mr Renehan said.

"We will be recruiting more people again across the business as soon as good seasonal conditions return, but it will be an incremental growth based on our restructured focus."

Cutting jobs is a terrible decision to have to make, but the company has to be the right size for the current conditions - Tim Watson, Namoi Cotton

Namoi chairman, Tim Watson, said while the cuts were initiated because of the drought the opportunity for the new CEO to re-align the business to improve its interface with growers was important for the company's future, too.

"As a grower myself, I know there are times in the past when we've felt we probably needed to be closer to understanding what's happening at the gin, or getting feedback about our crop directly from those handling it," he said.

"Cutting jobs is a terrible decision to have to make, but the company has to be the right size for the current conditions.

"When it rains we will review our requirements based on our new structure."

Mr Renehan said the restructure process would be completed before Christmas, noting all redundancies had now been finalised, with some staff already moving to new jobs in mining, local government and other businesses in their areas.

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