Pepsi Co. To Cut Jobs


Frito-Lay Inc.’s Plano headquarters let go about 130 employees this week as its parent company, Pepsi Co., initiates a “productivity program,” the Dallas Morning News reported.


PepsiCo Inc., Purchase, N.Y., said Tuesday it plans to eliminate about 3,300 positions across the globe, 300 of which will be employees of Frito-Lay, the nation’s largest snack maker. The cuts will equal less than 1% of Frito-Lay’s U.S. workforce of about 48,000. PepsiCo also plans to shut down six plants, including one Frito-Lay plant in Canada.


“We’re doing this to streamline the organization,” said spokeswoman Aurora Gonzalez. “It’s an opportunity to take those savings and invest in innovation and brand building.”


PepsiCo anticipates that this streamlining will bring the company a pre-tax savings of more than $1.2 billion over the next three years.


The company also expects to have a pre-tax charge of up to $600 million in the current fourth quarter to cover the cost of the cutback.


Al Carey, Frito-Lay’s president and chief executive, told employees in a letter Tuesday that the decision to cut workers was made “only after careful analysis about how Frito-Lay can meet the changing realities of our future marketplace,” the Dallas Morning News reported.


“Despite our outstanding productivity gains and strong revenue growth, the steps we’ve taken won’t be enough,” he said. “We simply cannot absorb the rising economic pressures within our current structure.”


Frito-Lay last cut staff in 2005 when it laid off 250 workers, mostly at its headquarters in Plano. Those were the first layoffs since 1991.


The upcoming layoffs were announced as PepsiCo released its third-quarter earnings, which were down compared to last year, partly because of weak beverage sales and higher costs.


Earnings dropped despite an 11% increase in revenue, to $11.24 billion, on increased sales of foods and snacks.


Earnings for the quarter ended Sept. 6 were $1.58 billion, down 9% from the $1.74 billion last year. That totaled 99 cents per share, down 6% from the $1.06 posted last year.


Excluding losses related to commodity hedges, earnings were $1.06 a share, the same as the third quarter in 2007.




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