Nestlé job cuts could impact widely across the industry

The shockwaves surrounding news that Nestlé is planning to lay off a total of some 16,000 people across its global operations during the next two years are extremely clear to observe.

With the company’s shares down in recent times, and its latest nine-month results showing a 1.9% drop in sales, perhaps some degree of action would be expected of an international business that is trying to re-position itself amid a fiercely competitive marketplace.

But to make such a major announcement just over a month into his tenure as CEO is something that many would not have been expecting from Philipp Navratil on such a scale at this juncture.

The decision to ‘reduce headcount’ as the company terms it from its major base of 277,000 comes against a backdrop of tough global economies, so in that context, some cuts may not have been entirely unlikely given the broader state of where the business is in the global financial picture.

However, of some concern is the fact that the business was unable to state where the job losses would be made, with its extensive confectionery operations in the UK and across Europe, potentially in the firing line for redundancies that will be most unwelcome to those feeling the sharp-end of such decisions.

When you drill down to the nub of it, when the world’s largest food group embarks on such a major programme of cuts, this hardly does much to inspire the wider sector that stability is on the horizon – quite the reverse in fact.

So the latest announcement from Nestle follows on from major chocolate and cocoa player Barry Callebaut declaring it was set to make a total of 2,500 job cuts across its international business.

The Swiss-based confectionery processing firm (which has reported that it has in fact moved to make a number of hires during this year), has endured turbulent time along with the remainder of the sector during the past two years of economic uncertainty, geopolitical issues of Ukraine and Gaza, and heightening ingredients input costs from the cocoa sector all having an impact in the past year or so.

While some have pointed to the decline in cocoa prices that has been seen in the past few months (with rates now at around $6,000 a tonne), this is still significantly above the prices seen just 18 months ago at around $3,000 a tonne), that had been the relative market norm for some while.

So the ripple effect of such decisions as major job cuts will not just be felt by majors players, it’s also the supply chains that are linked directly to them, so these are really significant matters for the global industry.

While conditions remain challenging, it can only be hoped that a re-setting of business models can in fact open up new opportunities right across the supply chain, though in an age of AI, it’s hard to see how a compelling case for that scenario will emerge.

Here’s hoping that the need for human input into major processes around the world’s key corporations will still be needed across engineering, equipment development and creative channels.

Neill Barston, editor, Confectionery Production magazine

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