Creamery Method of Operation

Isle of Man Creamery Ltd. - Method of Operation

Background

Isle of Man Creamery Ltd operates on a 1.57 hectare site in Braddan. On this site, milk for the local market is processed and cheese for markets on the Island and overseas is produced. Over recent years, the amount of milk produced on the Island every year has reduced from almost 40 million litres to around 24 million litres and is predicted to continue falling. This has meant that many of the Creamery's fixed overheads are spread over a smaller level of output, thus creating a challenge in achieving our primary goal of paying Manx dairy farmers a sustainable price for their milk. It has also led to a reduction in staff numbers from 120 in 2000 to our current level of 87.

The reduction in the Island's milk production does however create an opportunity for the Creamery to make more efficient use of the site. A local business has expressed interest in relocating its staff from multiple out-of-town sites to one central building on our land, as a tenant.

This could be accommodated by the Creamery with no impact on operational efficiency and would provide a much welcome injection of investment capital into the Island's dairy farm supply base.

The portion of the Creamery's site relevant to the Planning Application for Approval in Principle borders Ballafletcher Farm Road and Ballafletcher Road. This area is currently occupied by a cheese store and a warehouse for packaging materials. Both of these can be superseded by either outsourcing our storage requirements, or the construction of one smaller, more efficient, unit adjoining the Creamery. This would have operational and safety benefits by allowing us to avoid the need for fork-lift handling of product across the site.

Operational Traffic at the Site

The Creamery currently employs 87 staff. These can be split into three categories:

1. Office staff

• Total 22, including 3 part-time
• On site between 7am & 7pm (Contracted to work between the hours of 8.30am to 5.30pm, Monday to Friday)
• Those that drive use the staff car park at the front of the site
• Arrival and departure of some office staff may coincide with some of those of the tenant

1. Production staff

• Total 33
• Can be on site 24 hours a day; however, most frequently staff are on site between 12 midnight & 4pm-7pm (Contracted to work 39 hours per week on a 5 day rota basis to include Saturday and Sunday if required)
• Those that drive use the staff car park at the front of the site

• It is unlikely that the arrival and departure of any of our production staff will coincide with those of the tenant

3. Drivers/Logistics Staff

• Total 32
• Tanker drivers - team of 4 , on site between 6 am and 2 pm , 7 days a week
• Tanker vehicles litre tankers
• 2 to 4 vehicles departing and arriving by single track road adjacent the River Glass once to twice each per day
• Wholesale drivers - team of 5 , on site between 4 am \& 12 midday, 7 day rota
• Wholesale vehicles to 12.5 tonne lorries
• 3 in use on any one day Monday to Saturday
• Rounds men - team of 15,10 of whom are working in any given week.
• These workers are on site between 11 pm \& 7:30am, 6 days a week
• Rounds men vehicles -10 x Transit type or Fiat Scudo vans
• It is unlikely that the arrival and departure of any of our drivers or logistics staff (e.g. storemen) will coincide with those of the tenant.

If the office accommodation proceeds, we would also have the option of switching some, or all, of our vehicle movements to the rear entrance of the Creamery, facing the River Glass. This is currently used for some milk tanker and commercial vehicle movements.

Summary

It is likely that the milk intake at Isle of Man Creamery will continue to reduce. If this occurs, the number of staff at the Creamery may fall further, thus reducing the number of arrivals and departures from the site. Moving the storage of cheese and packaging materials from their current location, to a store adjacent the Creamery will increase the efficiency of our operations.

To conclude, the proposed office development will have no detrimental effect on the operation of the Creamery and would provide a much-needed capital injection to the Island's dairy industry.

Findlay Macleod <br> Managing Director, Isle of Man Creamery Limited

1st October 2012