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US unions beware: Nestlé UK CEO to transfer to the US

7 August 2012 Feature
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Paul Grimwood, CEO of Nestlé UK & Ireland, has been appointed CEO of Nestlé USA, to succeed Brad Alford when he retires in October 2012.

Nestlé's announcement noted that during Grimwood's tenure as CEO since January 2009 and as head of Nestlé UK Confectionery in the 3 years prior to that, "Nestlé's business in the UK & Ireland delivered consistent growth in sales and profitability, and grew overall market share". He is also credited with having "led a major investment programme to create Nestlé's next generation world-class manufacturing operations in the UK".

What the announcement doesn't note is that despite the company's consistent growth in sales and profitability, workers at Nestlé UK & Ireland have faced pay freezes and the elimination of the final salary pension scheme during Grimwood's tenure. Not to mention the loss of over 600 jobs at the chocolate and confectionery factory in York, the transfer of the production of key brands such as Smarties and After Eights and the ditching of the iconic Rowntree name during Grimwood's 3 years at the helm of Nestlé UK Confectionery.

Grimwood was brought in in January 2006 to clean up the mess caused by his predecessor whose costly launch of novel varieties of Kit Kat failed miserably. He quickly went on the attack against York workers' terms and conditions, even resorting to a form of notice which would have allowed the company to unilaterally change terms and conditions once the notice period was over. For details about this disgraceful episode, see Rowntree York: An attack planned long in advance. Faced with an OECD complaint submitted by the IUF and the resulting bad publicity in the UK, Nestlé backed down and agreed to structured negotiations with the unions.

York workers and their unions agreed to a pay freeze in 2007-2008, but once the factory reorganization was completed, a major turnaround in chocolate and confectionery sales had been achieved and with Paul Grimwood now CEO of Nestlé UK & Ireland, the company announced a further pay freeze - this time, throughout the entire UK business.

Along with the nationwide pay freeze, Nestlé UK announced in 2010 its intention to move away from collective bargaining toward performance-related pay. However, with union members across the country standing firm against this attack on their rights, Nestlé eventually backed down on the pay freeze and on individual performance-related pay.

As Paul Grimwood ends his tenure in the UK, he's leaving behind quite a legacy: the Castleford chocolate factory is set to close by the end of 2012 with a loss of 210 jobs, the Hayes Nescafé factory will close by 2014 with a loss of 230 jobs, jobs are at risk at the Girvan factory in Scotland. Pay talks continue to be a challenge in York and elsewhere as Nestlé refuses fair compensation for inflation and a fair share of the benefits of NCE/LEAN implementation. The latest York ballot resulted in 94% of the union membership rejecting the company's pay offer and requesting the trade unions to organise an industrial action ballot.

Just as Paul Grimwood prepares for his transfer, analysts are expressing their concerns over Nestlé's US business, as just-food reports here: US presents challenge for ex-Nestlé chief. Many of the issues raised (loss of market share, drop in promotional activity, elimination of SKUs) are the same ones Grimwood tackled while at the helm of UK confectionery. For the turnaround he managed to achieve, UK workers and their unions paid a heavy price - and are continuing to pay.