GERMANY – The Switzerland based food and beverage giant Nestle has announced that it will close two locations and reduce the workforce at two others, putting a total of 360 jobs at risk.
A Reuters report indicates that the move was blamed on lower demand and the company was looking to shift the production operations previously done at the to-be-closed sites to other locations.
“This gives us a reliable framework with which to set up our industrial structures in a very dynamic and rapidly changing environment,” said Nestle in a statement.
In June this year, the company which produces baby food, medical food, bottled water, breakfast cereals, coffee and tea, confectionery, dairy products, ice cream, frozen food, pet foods, and snacks, said it was closing its factory in Ludwigsburg, near Stuttgart.
The closure of the German plant which makes coffee substitute Caro and roasted cereals put about 100 jobs at risk at the facility.
The Swiss food giant attributed the closure to reduced demand for Caro, which was popular in the post-war period.
Also, underutilization of the facility and production volume stagnation made it difficult to operate at profitability levels in the consumer goods segment.
The company which employs more than 330,000 people, has strong brands exceeding US$1.1 billion in annual sales and these are: Nespresso, Nescafé, Kit Kat,Smarties, Nesquik, Stouffer’s, Vittel, and Maggi.
Nestle is also said to be closing a laboratory in Weiding, Bavaria, where 85 positions are being cut and an additional 106 positions will be lost at a baby nutrition plant in Biessenhofen, also in Bavaria.
Nestle also announced the halting of production lines in Lüdinghausen (Maggi) and Biessenhofen (infant cereals) affecting 170 workers; and job cuts to the sales force and back office workers affecting another 200 workers.
Cuts, costs and targeting profit margins
Embarking on massive job cuts is one of the measures that Nestlé CEO Ulf Mark Schneider termed as ‘call for increasing profit margins up to 18.5%’.
The company has launched an attack on collective agreements, demanding cut-backs on salaries and working conditions.
In nine-months sales report, the firm managed a 2% increase in sales to US$66.69 billion with a focus on positioning the portfolio towards attractive high-growth categories.
Massive job cuts, facility closures are part of the strategy to achieve the full-year 2018 guidance and 2020 targets.
“We have also made good progress on our various cost reduction programs.
Our growth and efficiency initiatives put us on track to meet our full-year 2018 guidance and 2020 targets,” said Mark Schneider in results announcement.