Costs too steep to keep dairy factory open

A cheese and milk factory near the west Victorian country town of Colac is set to close down next year, shedding 130 jobs, after it was deemed too expensive to upgrade.

The century-old factory, owned by dairy giant Fonterra, is set to close in July next year after chief executive Simon Bromell told workers on Monday that all manufacturing at the Cororooke plant would cease.

Fonterra instead plans to spend $20 million on the upgrade and expansion of two other factories in Victoria’s west at nearby Cobden and Dennington. They will take over production of the Mainland and Western Star cheddar, mozzarella and parmesan cheeses along with milk powder, The Australian reported.

The Cororooke plant still runs on steam boilers which need coal briquettes for heating, with the company stating that it costs $45 a tonne more to process skimmed milk powder at Cororooke than at the gas-powered Cobden plant.

"We have explored all options to keep the site open but they were not commercially viable," Bromell said.

Bromell said the decision to close the plant had been difficult as most of its employees are Colac locals who have worked at the factory for many years.

Bromell said the company would help employees relocate to work at other company factories, but that redundancies were inevitable.