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Nestl� announces mass redundancies at UK chocolate factory

Posted to the IUF website 22-Sep-2006

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On 20 September, Nestle announced to its workforce at Rowntree chocolate in York - in a closed room with security guards at the door - that it would eliminate 645 jobs and shift production of a number of brands to other factories in the UK and Europe as part of a major restructuring plan. The proposed production transfers will lead to the abandonment of part of the site.

On top of this announcement, Nestle also gave notice to terminate all existing terms and conditions of employment for administrative and production workers, i.e. the remaining 1,529 workers at the York site.

What this essentially means, is that ALL factory and office workers in York have been put on notice.

Mismanagment responsible for dismal chocolate sales in the UK

Nestl� is telling its workforce that redundancies and cuts in payroll costs are necessary to make the business "fit for the future". However, the Nestl� UK chocolate business is currently not "fit" as a result of negligent mismanagement of a successful business based on iconic and well-loved brands such as Smarties chocolate beans and KitKat. Nestl� chocolate brands began losing market share to Cadbury and Mars in the UK in the early 2000's as these companies managed to adapt to the changing UK candy market and the increasing power of retail. While Nestl� was cutting back on advertising and trade spend (the cost of securing shelf space in supermarkets) and reducing its sales force in its struggle to support as many as 20 brands, its competitors were instead streamlining their portfolios and investing considerable amounts of money in agreements with supermarkets for prime display space.

In November 2003, Nestl� brought in an executive from its Australian ice cream division to turn around the UK chocolate business. The results of the ensuing experiment in flooding the market with novel varieties of KitKat were disastrous: it led to an 18% drop in sales and nearly destroyed the brand.

In November 2005, the inept executive was removed from his post. But it's the workforce that's being made to pay for Nestl� management's mistakes.

An attack planned long in advance

For a better understanding of what's really going on, it's necessary to take a close look at recent events:
Nestl� prepared the ground almost one year ago to ensure lower redundancy expenses prior to the bombshell announcement and is now in the process of ensuring that it will achieve further savings by taking the extreme measure of terminating the terms and conditions for all York employees. Under UK legislation, this means that the employer and the unions have 90 days to reach a new agreement; failing that, the employer can impose its own requirements on a "take it or leave it" basis.

GMB and AMICUS, the unions representing workers at York, have vowed to fight job losses, production transfers and any unilateral changes in pay and conditions of employment.

The IUF has informed its affiliates in Nestl� and alerted those in countries earmarked to receive production from York. It is possible that the IUF will be initiating international action against the company in support of our affiliates in the coming days.

Nestl� accused of violating OECD Guidelines in the UK.