UPDATE: Mondelez announces first round of Chicago bakery layoffs, now facing lawsuit
UPDATE: The Bakery, Confectionery, Tobacco Workers and Grain Millers union filed a lawsuit against Mondelez due to the layoffs, citing discrimination and the voiding of a collective bargaining agreement, reports the Chicago Tribune.
- Mondelez International has announced pending job cuts to 277 workers from its Southwest Side Chicago plant. The layoffs are expected to begin March 21.
- These layoffs are the first round of the 600 job cuts Mondelez announced for the long-standing bakery in July, which coincided with Mondelez's investment in its Salinas, Mexico facility.
- Unions representing the workers have been fighting for the employees' jobs, but for now, those who have received notices have worked at the plant for eight years or less and will be dismissed in reverse seniority order.
Mondelez and other major manufacturers have pursued cost-cutting strategies in recent years, including Mondelez's decisive efforts overseen by CEO Irene Rosenfeld, amounting to a planned $3 billion by 2018 that includes zero-based budgeting, a popular strategy among food and beverage companies today. However, investors, including Bill Ackman, believe more is needed.
The Mexico deal is part of those efforts, as Mondelez expects to generate about $46 million in annual savings by installing four state-of-the-art production lines at the Salinas, Mexico, plant. This translates to a $130 million investment, instead of investing that money in expansion at the Chicago plant. Mondelez is shutting down nine product lines at the Chicago bakery, which has prompted the layoffs.
In its latest earnings report released in October, Mondelez's third-quarter profit exceeded Wall Street estimates, thanks in part to cost-cutting and gains on its coffee business divestitures.
- Chicago Tribune Mondelez warns 277 Chicago workers of layoffs