Canadian-based dairy giant Saputo has announced it will close its Maffra factory in East Gippsland.
It said it will also 'streamline activities' at its plants in Leongatha in West Gippsland and Mil-Lel, near Mt Gambier, South Australia.
About 75 employees at the three sites will be impacted.
But the company says the closure will have no impact on it milk suppliers and minimal impact on its customers.
"While a very difficult decision to make, today's announcement continues our journey towards long-term success for our business in Australia by increasing our efficiency and productivity, and making our business more competitive," Saputo president and chief operating officer (International and Europe) Leanne Cutts said.
"These strategic steps taken to further streamline our network aim to leverage SDA's broader manufacturing network capabilities while creating synergies to maximise the return on every litre of milk."
The company said it would shut down its bulk powders production area at Leongatha and close its cheese packaging area at Mil-Lel.
Other facilities would absorb the production and packaging of the three affected facilities.
Some affected staff would be offered redeployment and retraining opportunities, but where this was not possible, they would be made redundant.
The closure has not surprised many in the industry - with one of the dryers at Maffra being closed earlier this year.
At the time, an industry insider said the Maffra plant was operating at a quarter of its capacity.
The company's president and chief executive officer Lino Saputo in August flagged its intention to rationalise its Australian operation in response to falling milk supply.
Reduced milk availability in Australia was negatively impacting efficiencies and the absorption of fixed costs.
Despite high milk prices, it flagged that it did not expect milk production in Australia to increase.
"Managing our milk intake is our top priority for this business," Mr Saputo said at the time.
"As part of our global strategic plan, we are continuously reevaluating our Australia network to make sure that we have the right infrastructure in place for the total milk that we have today and that we anticipate over the next few years."
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Carlene Dowie
Carlene Dowie is the editor of the Australian Dairyfarmer magazine and has more than 30 years' experience as a rural journalist.
Carlene Dowie is the editor of the Australian Dairyfarmer magazine and has more than 30 years' experience as a rural journalist.
