- Nestlé will shutter its Indianapolis frozen specialty food manufacturing facility by the end of December, according to a posting on the Indiana Department of Workforce Development website.
- The closing will affect 172 employees in retail sales and deep frozen supply chain portions of the Nestlé workforce. The layoffs will begin on Nov. 1 and continue through Dec. 31.
- The affected employees are not represented by a union and therefore not able to automatically transition into another position with the company, according to the filing.
As Nestlé reorganizes and moves away from direct-to-store delivery to a warehouse model, it is shuttering distribution facilities in favor of leveraging its already-existing warehouses, from which stores are able to stock their own shelves.
The company announced this decision in May when it said it would close eight frozen warehouses by the second quarter of 2020. There have already been multiple closure announcements. On Aug. 16, Nestlé submitted Worker Readjustment and Retraining Notifications to labor authorities in states including Arizona, Colorado, Kansas, Washington and Florida. Including this most recent closure in Indianapolis, the Nestlé layoffs will total around 4,000 employees and will begin Oct. 18.
Although this is the first plant closure in Indiana, Nestlé recently said it would also close a frozen distribution center in Fort Wayne. That closure will impact 69 workers.
Reactions to the closures seemed to be muted on social media, possibly indicating that the company's decision to announce these impending layoffs in May — although there were no specifics at the time as to the locations — was a wise decision to help soften the blow.
According to the company filing with the Indiana Department of Workforce Development, the distribution center that is closing is associated with Nestlé Dreyer's ice cream. This is in line with the company's announcement to first begin the DSD-to-warehouse transition with its ice cream and frozen pizza brands.
Nestlé already uses a warehouse model for its frozen snacks business. Transitioning to a similar model for ice cream and frozen pizzas will likely use similar equipment and transportation, making that part relatively easy. However, migrating to a warehouse model for other products might present further logistical challenges, including relying on other companies to be equipped with facilities to store fresh products to avoid spoilage.
As Nestlé looks to cut $1 billion in procurement and operations costs, this closure will get the company one step closer to its goal. By converting to a model that cuts out the middle man and reduces the number of wages needing to be paid, it will cut costs for the company and could help to lower product prices, and may also make Nestlé more competitive.
Still, with no indication of job transitions or severance packages for the employees Nestlé is laying off in Indianapolis, the company will need to tread carefully and take care that morale doesn't flag, which could cause bigger problems. If workers are fearing for their jobs or feeling demoralized from constant cuts, the Swiss giant may not be able to get the expected efficiencies out of its workers. Employees also could take a page out of former Kellogg employees' books and demand compensation for terminated contracts.