PepsiCo is making a major adjustment to its U.S. operations by shutting down four of its bottling plants. Unfortunately, 400 employees will be affected by this decision. With 136 workers impacted in Cincinnati and similar numbers, in Chicago and Harrisburg. The company’s move is aimed at streamlining operations amidst declining sales trends.
The company has specified that the Chicago plant will be the only facility completely shutting down. Operations such as sales, delivery, and warehousing will continue in a limited capacity at the other three sites.
Tough Times in the Beverage Industry
Currently facing difficulties PepsiCo is reevaluating its forecasts due to shifting consumer patterns in key markets such as the U.S. and China. The company had to adjust its sales expectations as consumers in the U.S., China and other regions reduced their purchases of beverages and snacks following a period of price increases. Global buying habits have been impacted by a drop in consumer spending following a period of rising prices worldwide.
With a reported 3% drop in beverage sales in North America for the second and third quarters of 2024, and a decline in net income by 5% to $2.9 billion for the July-September period, PepsiCo is refocusing its efforts on boosting efficiency and productivity.
Legal Concerns
Despite the ongoing restructuring, PepsiCo has pledged to support its employees during this transition. The company has promised that those affected by the plant closures will continue to receive their pay and benefits for 60 days, even though many will not be required to work during that period.
However, the situation has stirred some legal controversies, particularly concerning the closure of the Chicago plant. The Teamsters Local 727, which represents the workers at this facility, has accused PepsiCo of failing to provide the legally required 60-day notice for plant closures or mass layoffs for locations with 50 or more employees.
John Coli Jr., the secretary-treasurer of Local 727, voiced strong disapproval, saying, “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.”
Coli also mentioned that the union, which had negotiated a new contract with PepsiCo just this past summer, was kept in the dark about the potential closure, hinting at possible legal actions against the company.
In response to the allegations leveled against it, PepsiCo has strongly asserted that its plans to close several facilities strictly adhere to all relevant legal standards.
The company stresses its dedication to the well-being of its workforce, ensuring that it remains a core focus during these transitional times. PepsiCo said in a statement, “Our top priority is to support our employees during this transition, and our commitment to serve Chicagoland remains strong.”
As the company adapts to these changes many communities and numerous families are preparing for the effects of these closures. The next few months will be crucial for PepsiCo as it works to steady its business and find its place in the beverage industry again.
