PepsiCo to cut 8,700 jobs; 4Q net rises

PepsiCo plans to cut 8,700 jobs across 30 countries, or about 3 percent of its workforce, as it seeks to offset high commodity costs and increases investment in advertising and marketing in North America.

The maker of Pepsi soda, Tropicana juice and Doritos chips declared that it expects the restructuring will save an additional $1.5 billion by 2014 – on top of $1.5 billion in cost cutting it previously announced. The announcement of the job cuts came as the company reported slightly higher earnings for the fourth quarter.

Pepsi’s rival Coca-Cola Co. also announced its own cost-cutting program, although Coke said its plan would ultimately add jobs. PepsiCo has been losing ground to Coke, on the soda side at least, since Coca-Cola has more of an overseas presence, particularly in emerging markets. Pepsi’s snack business has been stronger. Company is still denying any intention to surrender to analysts’ demands to split into two.

Pepsi said “tough decisions” were needed because it expects 2012 will be the second year in a row with higher-than-average costs for commodities. It said it is not able to offset those costs with higher prices because of consumer caution in light of the uncertain economy, so the plan to cut costs elsewhere is needed.

At the same time, PepsiCo plans to increase advertising and marketing behind its brands by $500 million to $600 million in 2012, with a particular focus on North America. It also plans to increase dividends and share buybacks in 2012 to return cash to shareholders.

It’s not surprising to hear that a company known with its anti-union policies is planning to make the workers pay for high commodity costs and increases in advertising, marketing as well as dividends and share buybacks.

With the decision of PepsiCo to cut 3% of its workforce, trade unions organised in PepsiCo operations must be prepared for the fact that the company can attack the unionised workplaces and reduce unionised jobs.

Please inform the IUF Secretariat and share the developments in your workplaces regarding any job cut plans. Thus we can inform the other unions in PepsiCo union network to generate support and solidarity.