Anyone following the UK parliamentary enquiry into the takeover of Cadbury by Kraft could not help but conclude that Kraft was either less than truthful, or incompetent, or both, in its cynical manipulation of false hopes around the Cadbury Somerdale plant previously slated for closure (see Kraft on a Diet after the Cadbury Feast – How Many Union Jobs Lighter?). The Committee (whose report, including transcripts of testimony from Unite, is available here) also had some penetrating observations concerning the role of short term investors in sacrificing the long term interests of the company for an instant capital gain, and its consequences for workers and their communities.
What has Kraft CEO Irene Rosenfeld (whose refusal to appear in person soured the Committee and UK public opinion generally) learned from this affair? There is “a little bit of agitation out there”, Rosenfeld told the Wall Streeet Journal in an April 19 interview. What was Kraft doing in response? “We are doing surveys to understand how people are feeling”, said Rosenfeld.
Cadbury employees in the UK are not the only ones agitated about the consequences of the deal. The “agitation” extends to Kraft employees worldwide, who are wondering how the projected USD 675 million in cost savings Kraft has promised to wring out of the system to pay for the takeover – over and above the cost-savings already announced by Kraft – will impact on their jobs. Warren Buffet, whose Berkshire Hathaway is Kraft’s largest stakeholder, is also “agitated”. He’s now pointedly called the acquisition “dumb” (as opposed to his pre-takeover characterization of it as a “bad deal”), further ratcheting up the pressure for even greater cost savings and job cuts. Buffet was a bit more circumspect about Rosenfeld’s USD 26 million compensation package, but couldn’t conceal his irritation when speaking to reporters at the latest Berkshire Hathaway annual gathering. Of course no one proposed surveying Kraft workers to understand their “feelings”…
In response to communications from unions around the world calling on Kraft to engage in a global relationship with the IUF and its affiliates, Rosenfeld has insisted that the “solution” to agitation is “to follow the established communication channels.” The problem is that these channels don’t exist in large parts of the world, like North America, where the company’s hostility to unions is well known. In other parts of the world, like South Africa, where Kraft recognizes and bargains with unions, the question has also gone unanswered. And the root of the problem is that Kraft corporate will dictate the global strategy while denying unions access to the global decision makers.
In this situation, Kraft needs no “surveys to understand how people are feeling.” Reuters reported on January 29 that Kraft couldn’t even say how many jobs were cut following its acquisition of Lu from Danone! To be serious about moving beyond the frenzied cost cutting that has regularly followed the quarterly investor calls, Kraft needs to look at the way other global food companies have extended union recognition to the international level. This has led to the development of genuine channels for negotiation, rather than mere damage control. Failure to do so can only mean that the “agitation” out there is likely to continue and grow.