Unilever/Bestfoods, Pepsi/Quaker, Kraft/Nabisco… M&A activity has rarely been so intense. It often prompts job losses – good news for the stock price but shattering for employees. Paul Garver of the international trade union IUF discusses the impact of some of the recent mega-mergers charted on just-food.com – and outlines how some multinationals are working with unions to protect employee interests.
When Unilever paid nearly US$25bn to acquire Bestfoods last year, it was good news for Bestfoods shareholders, but bad news for the employees of both companies. That reckoning came due on 27 April 2001, when Unilever announced 8000 job cuts and 30 factory closures directly related to the integration of Bestfoods.
These cuts come on top of the 25,000 job losses and 100 factory closures announced by Unilever last year as part of its ironically named Path to Growth restructuring programme. Since no memo was leaked to Le Monde, this announcement did not cause an immediate uproar. Yet its negative implications for Unilever employees dwarf those related to the restructuring of Danone‘s biscuits sector. 33,000 jobs lost amount to 11% of the 295,000 now employed by Unilever.
Information from company spokespersons on where the cuts related to the integration of Bestfoods would be made was sketchy and conflicting. While the spokesperson for Unilever’s London headquarters said the cuts would be primarily in North America and Europe and would come both from Bestfoods and Unilever, Unilever’s spokesperson in Rotterdam said that the job losses would be at Bestfoods sites in North America, Latin America and to a lesser extent in Europe.
The company spokespersons did agree that the duplicate sales forces in 18 European countries would be consolidated, that the overall savings from the reductions would be US$750m a year, and that a review of factory sites would be completed by the third quarter of this year.
Bestfoods more profitable than Unilever?
“Food industry workers have become the disposable items in the recurring cycle of cost cutting that affects all of the food industry”
Top managers face pressure as well, but they at least are being offered substantial performance bonuses as consolation. Lower-ranking employees, and the unions that represent them, are confronted with the negative consequences of business decisions made at the top solely for company strategic and financial reasons. The Unilever European Works Council has demanded timely and proper consultation on these plans. It will be interesting to learn if Unilever provides information in the detailed and comprehensive form that Danone has provided, and if it agrees to such an extensive consultation process as is now taking place within Danone’s biscuit division.
Danone: “Exemplary social plan”
Since the formal announcement of Danone’s plan for its biscuit division on 29 March, bargaining has taken place between Danone and the IUF at the European level, as well as within the various countries affected. For example, an exemplary social plan has been agreed with Belgian unions for the Beveren site, which provides either for continued employment with Danone or other employers, or for generous retirement or severance benefits. In Hungary, Danone was convinced that its closure plan for Györ was ill conceived, and has agreed to withdraw it in favour of ongoing negotiations with the IUF-affiliated union there. Ongoing discussions are underway for a comprehensive agreement to apply the principles of the 1997 agreement between Danone and the IUF on procedures to be followed in cases of restructuring to the concrete situation of the biscuits sector. The goal of the IUF is that no employee will suffer involuntary loss of employment or income as a result of Danone’s restructuring plan.
Even though this substantial international consultation process will succeed in mitigating the negative impacts on Danone employees, it does not address the substantive causes of job losses through corporate restructuring in the food industry. Food industry workers have become the disposable items in the recurring cycle of cost cutting that affects all of the food industry. Under pressure from financial markets for higher and higher rates of profit, the largest multi-product companies and the smaller players scrambling for a share of the global market are continually restructuring their operations. Heinz had not yet completed its “Project Millennium” restructuring programme when it launched “Operation Excel” that would eliminate seven of its 21 European factories.
“Announcing deep cuts in personnel too often boosts stock prices”
The consolidation of the global food industry into fewer and fewer companies in each sector, driven to a large extent by the concentration and globalisation of the retail sector, reduces overall employment in the industry. Employment at Nestlé and Unilever, for example, remains essentially stagnant as the companies extend their global scope and achieve record sales and profits. Meanwhile companies with long traditions like Bestfoods, Nabisco, Pillsbury, Keebler, Quaker Oats and Ralston Purina, together with their jobs, disappear from the scene.
The IUF, as a global federation of unions representing employees in the food and allied sectors, is committed to defending the interests of its members in the globalised economy. Just as Nestlé or Unilever, Kraft or Coca-Cola develop their capabilities to co-ordinate their activities globally, so are the unions that represent their employees organising themselves at the global scale.
The struggle to defend jobs and working conditions, however, takes place on increasingly unequal terrain. Over the past decade, the quickening pace of globalisation, privatisation and corporate mergers has strengthened the position of the employers, while trade union bargaining power has been eroded through layoffs, outsourcing and subcontracting. The trade union movement, to the extent that it operates within a purely local or national context, is placed in a position of institutionalised weakness vis-à-vis increasingly mobile employers whose right to invest (and disinvest), downsize, rationalise and transfer production across borders is enshrined in regional and international trade regimes like NAFTA and the WTO.
One mechanism to address corporate power is the pattern of international framework agreements negotiated by the IUF and transnational corporations on trade union rights and minimum labour standards, such as those agreed with Danone. These international framework agreements do not substitute for or replace collective bargaining at the plant and national levels. Their purpose is to secure the capacities of unions at those levels to confront the concentrated power of global corporations.
For the IUF, international framework agreements on trade union rights, together with international action to address the inequalities in the current global trade and investment systems, are the fundamental building blocks in the construction of a new system of international industrial relations appropriate for working people in the age of the global corporation.
Research Officer-Transnational Corporations
Telephone: +41 22 7932233
Fax: +41 22 7932238