Ken Mitchell wants to know how Saskatchewan Wheat Pool plans to create stronger ties with members by closing more elevators and cutting staff.
The delegate from Preeceville, Sask., suspects elevators in his area are on the chopping block after chief executive officer Mayo Schmidt announced March 7 the company would close an additional 63 elevators and eliminate up to 75 management and 200 union positions as part of a restructuring plan.
The elevator consolidation program, which originally included 235 closures, will finish two years ahead of schedule. By July 31, 2001, the pool will be left with about 100 elevators.
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Among the job cuts were several district representatives, who typically assist pool delegates and help present programs to farmer members.
“The reaction by the membership so far is very negative,” Mitchell said as he headed to a pool meeting March 13.
“The attitude is, ‘why is the wheat pool walking away from the membership?’ “
The announcement was not unexpected. The pool lost $12.9 million last year and posted a $14.5 million loss in the first quarter of this fiscal year. Second quarter results are expected next week.
Costs versus savings
The cuts and closures will result in a charge of $27 million against third quarter earnings. They will save the company $15 million in fiscal 2001 and $20 million annually after that.
Schmidt, who pledged to build stronger relationships with producers when he joined the pool in January, said he wasn’t worried about rural backlash.
“Our producer base has been asking for change,” he said. “They look forward to a healthy organization.”
Schmidt always said his first goal was to strengthen the company’s financial position.
David Vanderwood, market analyst with Odlum Brown in Vancouver, said Schmidt had no choice but to tackle the problem head on.
“They’ve got a cost structure that’s just a little bloated,” he said. “The acceleration of the consolidation program takes some fat out of the system and makes the company leaner and meaner in our view. I wouldn’t be surprised to see more announcements.”
Ken Rosaasen wouldn’t be surprised either. The farmer and University of Saskatchewan agricultural economist said Sask Pool has to put a lot of grain through its concrete terminals to make them pay.
“They plotted a path and it’s pretty hard to turn back,” he said.
Dale Markling, spokesperson for the Grain Services Union, was waiting for a March 14 meeting to learn the details of the job losses. He said the union expects about 110 people will be affected.
“The 200 includes some that we knew about previously.”
Markling said the cuts will negatively impact customer service: “They’re operating on bare bones as it is.”
Pool president Leroy Larsen said it was a tough decision to terminate employees.
“I certainly have a lot of compassion for those people today.”
