Kraft to Cut 6,000 Jobs, Close 20 Plants

[NNN0LHI]

http://story.news.yahoo.com/news?tmpl=story&ncid=716&e=8&u=/ap/20040127/ap_on_bi_ge/earns_kraft

CHICAGO - Kraft Foods Inc. said Tuesday it will eliminate 6,000 jobs, or 6 percent of its work force, and close 20 plants worldwide over the next three years as part of a restructuring that follows more than a year of disappointing sales and earnings for the biggest U.S. food company.

About 1,300 salaried positions in North America will be eliminated in the first quarter, with the remaining cuts occurring by 2007, Kraft said.


The moves were disclosed in Kraft's fourth-quarter earnings release Tuesday afternoon. Net income of $869 million represented a 7 percent drop from a year earlier — the company's latest earnings disappointment.


The reductions have been expected since began the Northfield, Ill.-based company shook up its top management last month and announced other changes after several quarters of sluggish sales, particularly for cookies and pizza.

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[Malva Zebrina]

1. I don't understand how Kraft can have "disappointing" sales

at all. They own an enormous amount of the piece of the pie in the food industry.

[liberalhistorian]

9. And most of it probably goes to their

CEO who ran the company into the ground!

[schultzee]

22. Why not cut CEO and Executive Pay? Lots of unemployed MBA's

out there would settle for a million a year instead of 5 to 30million. The republican greed pigs are destroying our entire country because of their greed.

[wildwww2]

26. I understand. People out of work can`t afford brand names like Kraft.

If they can afford to buy food at all. Is everybody ready for the Supreme Court to pick our next leader? As they did last time.
Peace
Wildman
Al Gore is My President

[jmowreader]

28. Comps

Also known as comparative sales, comps are used to measure the health of the retail industry.

There are two kinds of comps--dollar comps and unit comps. Dollar comps are "how much money did we make off this product this reporting period as compared to last reporting period?" Some of Kraft's products can be fairly reported on a monthly period. (All right, hold the stilted giggling. I know some of you are.) Macaroni and Cheese is an example of that. Others can only be reported fairly on an annual period--barbecue sauce sells far better in the summer, when people grill outside, than it does in the winter. So if I was the barbecue sauce manager, I'd want my comps reported on an annual basis, and only if Kraft is run by the pointy-headed guy from Dilbert would they not let me do it.

Unit comps are "how many units of this did we sell in the two reporting periods?" Some places don't even do unit comps--I don't do them except as guidance when ordering stuff. Kraft probably does them.

The ideal situation is comping higher in both categories--sell more product and make more money. If my department comps higher in dollars and lower (or flat) in unit sales, that means one of two things: expensive stuff is getting more popular, or the price of OSB went up again. It's very possible to do this--we just went from arsenic-treated lumber to non-arsenic-treated stock. The new wood is more expensive because of the chemicals in it, so I could lose ten percent of my pressure-treated lumber volume and still comp higher. (Having said this, which is true, I think I'm going to unit-comp higher even at the higher prices because there was some reticence to build with arsenical lumber. Besides, lumber goes up. Everyone knows that.)

What does it mean to dollar-comp lower but unit-comp higher? Easy: Your stuff got cheaper, but not enough cheaper to have volume compensate for price. Which means you fucked up.

If you comp lower in both categories, your product is losing popularity. This is when heads seriously roll.

[tabasco]

2. Every lost job under Bush is a person, not just a number.

This administration has caused so much suffering. Of course, the rich have their tax cuts, so not everybody is hurting. I'm sure working people will be getting their "trickle" any time now.

edit typo

[Fovea]

3. And this on top

of Boeing dropping the entire city of Wichita Kansas, a wholly owned subsidiary, into the toilet to the tune of 30,000 jobs.

[mhr]

4. The Washington Post Justifies The Jobless Recovery

Here is today's WP editorial and my letter to the editor.

http://www.washingtonpost.com/wp-dyn/articles/A50822-2004Jan26.html?na ...

The Jobless Recovery
Washington Post Editorial
Tuesday, January 27, 2004; Page A16

AS THEY AWAIT the results of the New Hampshire primary, Democrats should take a lesson from the nation's central bankers. Out on the campaign trail, the candidates (with the honorable exception of Sen. Joseph I. Lieberman of Connecticut) have been blaming the "jobless recovery" on President Bush, the trade system and the new phenomenon of "offshoring" service jobs to India. In rather less arresting tones, meanwhile, the Federal Reserve has been trying to explain why this blame is exaggerated. As Chairman Alan Greenspan said yesterday, the United States has lost jobs to foreigners before, yet it has always created others. The Fed committee that sets interest rates meets today and tomorrow, and will demonstrate one of the reasons why the new protectionism is misguided.

Snip ......

It's true that the shift of service jobs to countries such as India, like other trade-related dislocation, adds to the temporary pain of structural unemployment. But, as Mr. Greenspan says, new jobs will be created. If a U.S. firm shifts employment abroad, the savings flow back to the United States in the form of lower prices for consumers and higher dividends for shareholders; the consumers and shareholders will direct their new spending power at things that create employment. Meanwhile, the fall in prices will allow the Federal Reserve to keep interest rates lower, boosting the job-creation engine. At its meeting today and tomorrow, the Fed is almost certain to keep short-term interest rates at a rock-bottom 1 percent because forces such as "offshoring" are keeping inflation in check despite a rebounding economy. Offshoring, like trade, creates winners and losers, which is why open trade should be accompanied by social safety nets. But the winners will outnumber the losers, because the adjustment creates new efficiencies. Each worker can produce more, meaning that he or she can be paid more. Do the Democrats really mean to oppose that?

Snip ......

WP Editors,

The WP editorial from the Tuesday, January 27, 2004 edition titled The jobless Recovery is one of the most insensitive and callous missives printed.

To suggest that a jobless recovery is good mystifies me. To further suggest that the Bush Administration is not culpable is mind boggling.

I have been unemployed for 43 months. I have sent 1,430 resumes out the door. My resume is posted on 105 job boards. I have over networked all known acquaintances. Regrettably, I have not had a serious employment inquiry in two years. Past colleagues are having similar experiences.

Some would claim that one must not have enough education or experience. I must assume that a Masters in Business Administration and a Bachelors in Electrical Engineering are irrelevant today. An experienced Naval Officer just does not rate any consideration. Honorably discharged veterans are of no consequence. And, experienced commercial pilots are too trivial to mention.

Sadly, the Washington Post editors are truly out of touch with the economy. If a dose of reality is needed, come spend a week with me. After experiencing the umpteenth pot of beans, the Spartan accommodations, the threadbare clothes, the ever diminishing savings account, and repeated job rejections, one just might come to the conclusion that a jobless recovery is not good or justifiable.

Sincerely,
MHR

[Homer12]

8. A Lost living wage job for cheap goods, sounds like a great deal...

...to me.

[liberalhistorian]

12. Too bad we can't

have the pleasure of seeing all of the Post's editors thrown out on their ass, ineligible for unemployment, and unable to get another job no matter how skilled or how many years of service they've had. I wonder how great they'd think the "jobless recovery" would be then?

What the fuck has happened to the Post these past several years, anyway? The old Post NEVER would have been a shill for Shrub and the Bushistas, would have been dripping with disdain and contempt for them, which it wouldn't have hesitated to express in the strongest terms possible. Even BOB WOODWARD, of all people, has joined in the media whore brigade. Katherine Graham has to be spinning like a top in her grave right now to see what's become of the Post!

And if they think the supposed "savings" from all the outsourcing is going to go back into creating more jobs, then they must really have shit for brains. What puke-inducing corporate shills!:puke: :mad: :grr: :argh:

[kcwayne]

13. These clowns at the WP are clueless

"Cheaper goods means that consumers will direct their spending towards things that create jobs"

What unmitigated bullshit. Jobs doing what? We sure as hell are not going to build anything here, all investment in production is going overseas where the cheap labor is.

We are outsourcing design and engineering overseas, so we won't be conceptualizing more cheap goods to build overseas and bring back here.

The only thing we are left with for jobs in this country is serving each other sandwiches at Macs, fighting wars to keep control of the corporations assets overseas, and working in healthcare, where costs are soaring beyond the ability of anyone to pay for it. That is normally the harbinger of a collapse, irregardless of what the twits at the Fed are saying.

What we should do is put our heads together and see how we can get journalists outsourced to Bangledesh for $2.00 per day labor, and see how fast these assholes start whining.

[JohnyCanuck]

20. The fly in the ointment as I see it.

If a U.S. firm shifts employment abroad, the savings flow back to the United States in the form of lower prices for consumers and higher dividends for shareholders; the consumers and shareholders will direct their new spending power at things that create employment.

But at some point once too many middle class type jobs are gone, the consumers will stop being consumers because they are either out of work and earning nothing or working for subsistence wages in dead-end jobs at Wal-Fart. The US manufacturing base has shrunk to the point where I suspect even if overseas demand picks up due to the increases in pay in foreign countries due to US off-shoring, the manufactured consumer goods the foreign consumers will be buying with their new found wealth will not come from the US and provide employment for US workers. The shareholders are by and large pension funds etc. and/or rich buggers that don't really need to buy consumer products (they've got them all already) and once the consumers stop spending their shares will drop in value and their will be no more dividends anyway so they will end up no further ahead.

Even if under their optimistic scenario new jobs are created, what makes them stay in the US or North America if the Indians, Chinese, Malaysians etc. can do the same work at one tenth the cost. They told everyone who lost their factory jobs to train as computer programmers and System Administrators and networking techs. Now those jobs are going along with the manufacturing jobs, so what exactly are the 50 year old programmers supposed to retrain for next and how long before those jobs move overseas as well.

[schultzee]

23. B.S. the prices are never low enough to compensate for

unemployment or the large reduction in pay most people take. Liz Clairborn clothes went abroad and the prices went up. They lie.

[Barkley]

29. Write On!

Your letter to the editor is FANTASTIC!

Too bad you weren't lucky enough to get one of 1000 new jobs created last month ...

I'm pretty much in the same situation as you. I've got a Ph.D. in economics and a B.S. in engineering and no job! And Gov. Arnold's proposed cuts aren't helping matters.

The WP article is crap!

I know of no economic theory that says 'sending jobs overseas reduces inflation'. There are several proven policy tools at the disposal of the Fed for dealing with inflation and exporting jobs is not one of them.

Besides the U.S. economy has had stable prices for almost two decades. Deflation, not inflation is more of a threat these days.

I do know of Okun's Law, which calculates the foregone output when the economy fails to create enough jobs for all who are able and willing to work.

Assuming a natural rate of unemployment of 4.5%, and a output potential of $10 trillion GDP, a 5.8% unemployment rate cost the U.S. economy about $260 billion in foregone output!

A highly skilled labor force is central to our economic well-being.

Technical change (the by product of a highly skilled workforce) accounts for about 2/3 of the growth in our GDP. I don't see how exporting jobs overseas will encourage innovation at home.

An economy that no longer pays a premium for human capital skills (e.g. training in engineering etc.) discourages people investing in higher education in the first place.

I agree when you say the WP folks are outta touch. I can't wait until the WP starts out-sourcing editorials to India.

[Yavin4]

31. Elitism At Its Finest

The editorial staff of the Washington Post live in million dollar homes along the Potomac. They're embedded into the cushy world of Washington politics and government. Their kids go to elite private middle schools and universities. The Washington Post is nothing more than a pure elitist rag with absolutely nothing in common with the average American.

They look at outsourcing purely from a stockholder position, knowing full well that it could never affect them.

[liberalhistorian]

5. Yep, there's that

wonderful "roaring recovery" and "economic growth" Shrub's boasting that his fantastic tax cuts have created!

[indepat]

6. Wow, what a recovery is underway

[cosmicdot]

7. Kraft is owned by Phillip Morris aka Altria Group, Inc., right?

http://www.altria.com/about_altria/01_00_AboutAltriaOver.asp




~just as an aside~

surprised to see Billie Jean King on Altria's Board


Ms. King is an international tennis champion with a record 20 Wimbledon titles. She founded the Women's Tennis Association in 1973. In 1974, she founded the Women's Sports Foundation and Women's Sports magazine. She is the co-founder and current director of WORLD TEAMTENNIS. She is on the board of directors for the Elton John AIDS Foundation, Women's Sports Legends and Women's Sports Foundation. She is on the advisory board of Voxxy. She is a member of the International Tennis Hall of Fame and the National Women's Hall of Fame. She is a member of the Nominating and Corporate Governance and Public Affairs and Social Responsibility Committees


it just strikes me as odd to be on a Board of companies with questionable products RE health; and, at the same time, represent Aids Foundation and healthy lifestyles ...

[K8-EEE]

16. Yep And I'm Boycotting Them!

I wonder if the boycott is having any effect? This is a crappy company that promotes underage smoking outside of the US and gave tons of bucks to Chimpster.

Besides they make VELVEETA!

[underpants]

17. CORRECT! owned by Phillip-Morris HQ'd in Richmond

The company's brands include Oreo cookies, Jell-O desserts and Oscar Mayer hot dogs.


The southside vote? Ooooops

[lastknowngood]

10. I don't know how much more of this 8.2% booming recovery

I can stand.

[DS1]

11. Is Mac & Cheese in a slump from the low-carb craze?

[madrchsod]

15. no ..instead of buying

kraft at over a dollar a box people are buying cheaper brands, 33ct a box at aldia`s and store brands for 50ct a box. i eat m&c four times a week - i`m an expert on m&c pricing...

[mojowork_n]

19. At 15 cents a serving, how do compete against Ramen Noodles?

I'd guess KRAFT's problems are both at the very, very low end -- trying to compete against private label generic "house brands", at a time when most families are squeezing food budget nickles a little bit tighter -- and at the very, very opposite (high) end. When money doesn't matter, and people who can afford it are spending more for gourmet/healthier food, smaller companies have an advantage in turning out better, more creative products in a shorter amount of time.

All of which reflects the "two America's, two American economies" that John Edwards, among others, has been talking about.

...Eventually, of course, the Mac-N-cheese concession for the Proles will be a directly controlled subsidiary of Halliburton/Colonial-Administration-Industries. While all the really good Pheasant, free range Peacock and French Merlot are reserved for distribution through the good graces of the Republican Party's banquet/fund-raising (formerly known as the "rubber chicken") marketing office.

[BigBadDaddy-O]

14. That recovery is awsome huh!

Man I am glad that Bush recovery is going so well you know it.

[mbperrin]

18. Wow! Look at that *Bush job machine go!

There the jobs go!

[Nikia]

21. They are still making lots of money

Like many corporations, they want to make more money. Kraft has always been into making big money and squeezing every cent they can. It's amazing that they are still considered a premium product by many because they every pulled out almost every stop in making their product cheaply. They aren't putting extra calcium in the American cheese just because it is more nutritious.
I am may be biased though. I work for the competition. Well a small part of the competition.

[schultzee]

24. They want the whole pie, not a fair share. They want our share.

[Hobarticus]

25. Smirking Bush makes a private "cut the cheese" joke...

Actually he didn't, not that I know of, but that's his brand of "compassionate conservatisim" in action.

[Poseidon]

27. Ugh

Outsourcing and immigration are destroying America. We should ban immigration from countries like India, and ban the importation of highly-skilled workers. We should close down corporate tax shelters, and crack down on illegal immigrants that drive down wages all over America.

[lumpy]

30. Well I've been helping them out.

I refuse to buy Kraft products. I try to buy locally and make my own baked goods and always have tried to cook from scratch. Much more economical, better tasting and more importantly I know what my family is eating.

[JCMach1]

32. Walmart-- seriously... their pricing scheme

amounts to highway robbery for many manufacturers. You don't play ball, your products don't get sold.