Sabrina N Gordon, Business Reporter

Jamaica Producers Group (JP), seeking to stanch its big loses of the past two years and win back investor confidence, says it will cut 200 jobs or 40 per cent of the workforce, of its UK juice manufacturing subsidiary, Serious Foods.

The redundancies will take place in early March a 90-day consultation with employees required under British law.

"We have taken a look at the economic environment in the UK and have decided that in order to reposition the juice business to a sustainable and efficient level cuts are needed," JP's CEO, Jeffrey Hall, told Wednesday Business.

The agro-processing company, which is listed on the Jamaica Stock Exchange, had late last week reported its plans to the market.

Producers Group used to be the biggest growers of bananas in Jamaica and a major distributor of the fruit in the UK, but in recent years have been moving aggressively to reorganise its business in the face of changing market conditions.

With its preferential market for bananas in Europe under threat and facing increasing competition from Latin American producers, JP has been shifting away from produce farming and distribution and making juice, smoothies and snacks its core business. Its decision has been helped by a series of hurricanes over the past four years that have destroyed or badly damaged its banana farms in Jamaica.

In September JP announced that it would end export banana production here, essentially ending Jamaica's long history as a banana exporter.

But even as it contends with the move out of bananas and the off-loading other non-core operations, JP has faced another double whammy: rocketing price for fuel and raw materials last year, followed this year by weakening consumer demand.

Supply contracts

The company was also locked into economic supply contracts with British supermarkets, which bled its bottom line. JP has been attempting to jettison re-negotiate or jettison these contracts.

For the 10 months of 2007, up the first week of October this year, JP lost $1.2 billion.. For the whole of last year the company lost $479 million.

In last Thursday's posting with the JSE, JP said that the UK job cuts was part of a broader reorganisation that will include changes in the management structure. The moves would lower fixed costs and position the company to respond more effectively to adverse economic conditions in the United Kingdom.

"We believe that this formula can better reposition us as a leader in the fresh juice market in Europe," Hall said in an interview.

Low margin business

"We took on a significant block of low margin business in recent years and with the fall-out in the UK economy it is absolutely necessary to restructure the business to significantly reduce our fixed cost Hall said.

Hall declined to give the anticipated cost of cutting the 200 UK jobs, which will leave Serious Foods with about 300 employees in Britain. Neither did he disclose the projected saving.

Hall said that the UK reorganisation would unlike affect other areas of JP's business, with the restructuring of the banana segment having been completed with the closing of farms and the cutting of nearly 400 jobs in Jamaica.

"We have already done the restructuring to deal with the frustrations of banana export and improve efficiency at the corporate level, no other changes are expected" said Hall.

sabrina.gordon@gleanerjm.com