Heinz celebrates biggest profit jump ever with… mass layoffs
Global food manufacturer H.J. Heinz on May 26 announced record full-year (fiscal 2011 ending April 30) results. Sales in the fourth quarter increased by 6% over the previous year and profits rose by 16%. Net income resulted in earnings per share rising from 60 to 69 US cents. Investor appetites were unappeased – they wanted 72 cents a share. So Heinz announced the elimination of 1,000 jobs.
The announcement simply stated that 2 plants would be closed in the United States, 2 in Europe, and one in the Pacific – without specifying where. We now know that, so far, the closures involve the frozen soup facility in King of Prussia (US state of Pennsylvania), the prepared meals plant in Międzychód in Poland and the Girgarre plant in Australia. Restructuring in Australia will involve the loss of a total of about 340 jobs, as the 3 Australian plants are set to lose beetroot and sauces production and some meals production to the Heinz facility in Hastings in New Zealand.
Heinz will presumably decide later which other factories are slated for destruction. This phenomenon is nothing new: companies seek to please investors by announcing that x number of jobs will be scrapped, with the goal of reducing payroll and boosting the employee/asset ratio, and then scrambling to make the operational decisions without reference to productivity or even profit. Kraft Foods blazed the way in this respect in 2006, when it announced massive job cuts (without specifying where) together with financial results displaying increased earnings (“beating Wall Street expectations”).
IUF affiliates in Australia and New Zealand will be mounting a fight. The IUF has pledged its full support to members struggling against these savage job cuts dictated solely by short-term financial targets.