PepsiCo to shut down four bottling plants and cut over 400 jobs

11/05/2024 / By Ava Grace

International beverage and snacks giant PepsiCo has announced its plans to shut down four bottling plants in the United States, laying off nearly 400 workers.

The New York-based company said it will be closing bottling plants in Cincinnati, Chicago, Atlanta and Harrisburg, Pennsylvania in an effort to streamline its operations. Affected employees will be paid and receive benefits for 60 days, even though most will not be required to work during that time. (Related: Denny’s to shut 150 of its most underperforming restaurants in the U.S. by the end of 2025.)

PepsiCo has issued official Workers Adjustment and Retraining Notification Act (WARN) notices to state and local authorities, detailing the impacts.

The company also plans to provide assistance to help transition employees into new roles, either internally or externally. In Ohio, PepsiCo has committed to supporting displaced workers by providing information on job opportunities at nearby facilities.

As of the third quarter of 2024, PepsiCo reported a five percent decline in net income, down to $2.9 billion, with a similar trend in its North American beverage sales, which fell by three percent across consecutive quarters.

This follows years of consistent price increases, which may have contributed to recent consumer pullback in major markets, including the United States and China, the company said in an investor report released early this month.

PepsiCo’s North American financial outlook has been impacted not only by decreasing sales volume but also by increased operational costs due to inflation and rising commodity prices.

The company’s CEO Ramon Laguarta said strategic adjustments are needed to maintain profitability, especially in a high-cost environment. The company also outlined its continued focus on productivity gains and cost management as it navigates these financial hurdles.

Teamsters union raises concerns over plant shutdowns

Many of the employees that have been fired were represented by the Teamsters union, which warned of the impact the plant closures will have on its hundreds of members.

In Cincinnati, the plant closure will lay off 136 employees, including 104 members of the local Teamsters chapter. The company has engaged in bargaining with union representatives to discuss options for the affected employees, including potential internal transfers and reassignments.

The PepsiCo plant in Chicago is the only one that will fully close, with the company’s sales, delivery and warehouse functions in the plant to shut down soon, while these three functions are expected to continue at the Harrisburg, Cincinnati and Atlanta locations.

Teamsters warned that the Chicago plant’s closure will affect 150 employees. PepsiCo said the decision was difficult but it described the 60-year-old building as a facility with “physical limitations.”

Teamsters Local 727, which represents the plant’s workers, said it was informed of the closure in an email sent by PepsiCo attorneys. The union said PepsiCo violated federal law, which requires employers to give 60 days’ notice of pending plant closures or mass layoffs at locations with 50 or more employees.

“To lay off over a hundred Teamsters workers with no notice to them or the union, in violation of both our collective bargaining agreement and the law, is about as low as you can get,” John Coli Jr., the secretary-treasurer of Local 727, said in a statement.

Coli said the union negotiated a new contract with PepsiCo this summer but wasn’t told about a potential closure. He said the union may take legal action against the company.

Read more stories like this at EconomicRiot.com.

Watch this report from John Williams discussing 7-Eleven’s plans to shut down over 400 of its most underperforming locations in the United States.

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