French food manufacturer Danone has claimed that current information circulating regarding its planned restructuring of the company’s biscuit operations is inaccurate. The French food giant claims it has not finalised any decisions relating to closures or job losses. However, an internal memo leaked to French national Le Monde reveals that the decision to close ten factories, with the loss of 3000 jobs, was taken back in August. The only outstanding decision was how to make the news public.
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A week after the revelation of the job losses (click here), meetings were held on Wednesday between Danone management and representatives of Danone workers (Danone information and consultation committee) in over ten countries.
Danone says it intends to communicate its detailed plans for restructuring to the Information and Consultation Committee and to national consultation bodies within two to three months. Despite the report in Le Monde, the company claims that no final decision has been taken, that it is still reflecting on a restructuring plan, and that the decision will be taken late spring. Indeed, according to a statement released by the IUF union, which was represented at the meeting, Danone Human Resources boss Jean-René Buisson said that “corporate management has committed itself to providing Danone workers’ representatives full information at national and international level regarding the development of any plans likely to affect employment in the sector.”
However, news of the memo, dated 30 August, is likely to undermine any remaining confidence in the management. The salient points which Le Monde claims are in the leaked internal memo are outlined below:
Record [the codename given to the restructuring plan] is necessary to improve core profitability. The memo indicates that the group should argue in France that it is protecting its competitiveness rather than improving profitability. Announcing the plan in spring 2001 is fraught with danger, and the group has two scenarios.
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By GlobalDataThe first scenario would see the group make a global announcement about the restructuring project after the French municipal elections of March 2001, with the advantages of legal security, a transparent strategy and straightforward execution. However, the memo notes the drawbacks of this scenario, notably a violent reaction from those involved, intense media interest and the future impossibility of deviating from the plan without further consultation. Moreover, the move would reflect badly on such a successful company and in particular on its CEO, Franck Riboud, who has been carving out a reputation as a successful yet ethical businessman.
The second scenario is to stagger the announcement – allow the news to trickle out in stages, with the accompanying lessening of media impact. The memo lists the factories that will be closed and indicates that separate announcements will be made on different occasions about the various closures.
The article in Le Monde points out that the second scenario has a number of benefits but involves legal risks, and this explains why Danone, according to its sources, opted for the first scenario.
The leaked memo robs Danone of the opportunity to implement either scenario as it anticipated and, if true, will do lasting damage to the group’s reputation as a socially responsible employer.
To see the IUF’s press release following the meeting, click here.
