Graham's Dairies downgrades Nairn plant to distribution unit

(UPDATES - please see contrasting 'good news' story near end, plus a further later report about Graham's itself)

I wish I could write that the announcement that Graham's Dairies, based in Bridge of Allan in Perthshire, is to downgrade its Nairn dairy processing unit to a distribution centre only is any kind of surprise to me. Unfortunately it is not. In any case it is projected that 13 employees at Nairn will lose their jobs, reducing staffing levels there to 42.

As I wrote here in January of this year, its profits had been badly-dented in 2011 as a result of pressure on margins with the acquisition of new contracts to supply supermarkets - I described it then as perhaps a classic case of seeking growth in turnover by over-trading. Later in January I became aware that Glasgow-based Robert Wiseman Dairies had been acquired by Muller following its own poor economic results and simultaneously learned that Muller had cut the price it paid for milk from some suppliers.

The latest news about Graham's Dairies plans for its Nairn unit (until Setpember 2010 known as Claymore Dairies until its acquisition by Graham's Dairies) is not, I fear, the last we will hear of it. Supermarkets which are competing with each other to gain market share try to protect their own margins by squeezing their own suppliers, such as Muller and Graham's Dairies, and they in turn try to squeeze those further down the supply chain, in this case dairy farmers. As we now learn is already happening, from the first link above, the farmers supplying the Nairn unit are believed already to be receiving less in payment for their milk than those farmers who supply direct to the Bridge of Allan unit and it remains to be seen how the increased transport costs of trucking the raw milk to Bridge of Allan and back again to Nairn for distribution in the North as processed items will be factored into the costings - who will pay, in other words. I hope the optimistic projections from Graham's Dairies that innovation, marketing, new products and new contracts will not only increase sales, but allow it to maintain or improve its margins and thereby allow it to remain a viable concern.

1st UPDATE (Friday 11MAY2012 11.40 CET) I've just come across another item of business news in the Nairn area which is very happily a positive one - Asher's, the Nairn-based bakery business is to open a shop in Grantown-on-Spey, creating 5 jobs which will probably be part-time. According to company Director Ali Asher, its already-existing outlet in Aviemore (operating since 1998) means it already sends its distribution trucks to the area so supplying the new shop will be straightforward. It is expected the new shop will open toward the end of June, once the premises have been re-fitted and the new employees there will increase the company's workforce to 125.

2nd UPDATE (Saturday 2NOV2013 12.03 GMT) I posted a further article about Graham's on 31st October 2013, this time with much better news - please click here to go there now.