Wednesday, September 12, 2007

Coke lays off 125 in U.S.


First layoffs since '03
By DUANE D. STANFORD
The Atlanta Journal-Constitution
Published on: 09/05/07

Coca-Cola will lay off as many as 125 employees in the United States this year as part of a reorganization of its struggling North American division, the company said Wednesday.

The moves are part of a rapid succession of changes for Coca-Cola North America as the division tries to reverse lagging sales of its flagship soft drinks and increase profitability.

Most of the jobs to be cut will be in Atlanta, said Coke spokeswoman Lori Billingsley. Managers began informing employees Tuesday.

The layoffs represent about 3.5 percent of Coca-Cola North America's 3,500 full-time, nonhourly employees based in the United States. The cuts will be completed by year-end.

As many as 275 employees will have to reapply for one of 150 newly created assignments, Billingsley said. The 100 to 125 employees who aren't selected will be laid off at the end of December.

The ex-workers will get severance of at least two weeks' pay per year of service, depending on their pay grade, Billingsley said. They will get benefits during their severance period.

The layoffs are the first for Coke since 2003, when the company cut 1,000 jobs in Coca-Cola North America. Those followed 5,200 cuts that were made companywide starting in 2000 after Coke reorganized its global operation.

After addressing nagging problems in countries such as Japan, India and the Philippines last year, Coke CEO Neville Isdell turned his attention this year to Coke's largest and most troubled market, the United States. The country accounts for nearly 20 percent of Coke's global profits.
For decades, Coke's U.S. operation had set the bar for the rest of the company's global operating units. But that is no longer the case, Coke President and Chief Operating Officer Muhtar Kent acknowledged during an interview earlier this year.

During the first six months of 2007, volume sales in North America declined 2 percent, for example, while volume sales internationally grew 9 percent, according to Coke.
In fighting back, Isdell and Kent, along with Coca-Cola North America President Sandy Douglas, have attacked a host of problems since January.

Coke settled a lawsuit between the company and its franchise bottlers. The company boosted advertising, including buying ad time during the Super Bowl for the first time in nine years.
Coca-Cola North America created three new business units to focus separately on carbonated soft drinks, noncarbonated beverages and innovation.

The company purchased emerging new brands, such as Vitaminwater and Fuze, after being criticized for reacting too slowly to changing consumer tastes.

Coke also redesigned can and plastic bottle packages this summer to get new attention for the brand.

Then, on Tuesday, Coca-Cola North America announced it had finished retooling its management structure, realigning or creating more than 70 middle management positions.

"We want to reassert our leadership in terms of growth and profitability," Douglas said during an interview Wednesday.

Douglas said the structural changes will make Coca-Cola North America "faster and more effective" when it comes to reacting to consumers' tastes, servicing retailers and collaborating with the bottlers that package and merchandise Coke products.

One important change is an increase in the number of people who deal directly with large retailers, such as Wal-Mart, and the 70 franchise bottlers across the United States that package and distribute Coke's products.

John Faucher, an analyst for JPMorgan, said Coke has a big job ahead to properly integrate recent acquisitions of brands such as Glaceau and Fuze into its national distribution system.
"Given all the changes in the portfolio," Faucher said, "managing all the bottler relationships through these changes is insanely key right now."

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