Cost cutting at PepsiCo
PepsiCo is instigating a restructuring plan which will involve job losses and factory closures along with billions of dollars in associated costs.
Chief executive Ramon Laguarta, who replaced PepsiCo's long-time CEO Indra Nooyi last year, said on an earnings call with analysts on the second week of February that he sees no "need to shed or acquire businesses in any significant way".
Despite this statement, in a filing with the US Securities and Exchange Commission he revealed a multi-year "productivity" plan that will incur US$2.5bn in pre-tax costs.
PepsiCo said the plan "will leverage new technology and business models to further simplify, harmonize and automate processes; re-engineer its go-to-market and information systems, including deploying the right automation for each market; simplify its organization and optimize its manufacturing and supply chain footprint".
Of the associated charges, the company said 70% will be allocated to severance and other employee-related costs and 15% for asset impairments resulting from plant closures and related actions. PepsiCo will also incur 15% "for other costs" related to the productivity plan.
Meanwhile, the company also expects to book cash expenditures of around $1.6bn related to the restructuring plan, with about $450m to have a bearing on its 2019 cash flows and the rest over the following four years.
PepsiCo workers and their unions will be confronted with new technology and automation in facilities linked to a strong push to reduce labour and other operating costs. In workplaces where IUF affiliates are organized, our members will demand that any deployment of new technologies and automation will have to be a key issue for collective bargaining.
Please inform the IUF Secretariat at burcu.ayan@iuf.org if and when you hear of any restructuring plans including any instances where new technology is being deployed. In this way we can keep our PepsiCo membership in the PepsiCo and Frito-Lay Unions' network informed and offer each other whatever support and solidarity is possible in this situation.