The world’s largest food company, Nestlé, is set to lay off approximately 16,000 employees globally over the next two years. This significant job reduction coincides with the company’s efforts to enhance efficiency through automation. The announcement was made on Thursday.
Details of Job Cuts
Most of the layoffs will impact white-collar roles, totaling around 12,000 positions. The company aims to streamline operations by embracing automation and shared services. Additionally, 4,000 positions in manufacturing and supply chain management will be eliminated to boost productivity. Overall, these cuts represent nearly 6% of Nestlé’s workforce.
Leadership Insights
New CEO Philipp Navratil emphasized the necessity for change within the company. He stated, “The world is changing, and Nestlé needs to change faster,” adding that difficult decisions about workforce reductions are essential for future growth.
Impact of Automation
The rise of artificial intelligence (AI) has intensified concerns regarding job losses across various sectors. In May, the CEO of AI firm Anthropic warned of a potential spike in unemployment due to advancements in AI. Nestlé acknowledges the integration of AI in various functions, including research and development, as outlined on their website. Moreover, the company employs automation in promotional activities related to discounts and in-store displays.
Recent Company Turmoil
This announcement follows recent turmoil at Nestlé, including the unexpected dismissal of former CEO Laurent Freixe in early September. Freixe was removed for not disclosing a romantic relationship with a subordinate, violating the company’s code of conduct.
Current Financial Standing
In its latest quarterly report, Nestlé highlighted a 4.3% increase in organic sales. This figure demonstrates underlying growth, even amidst economic uncertainties. Despite the challenges posed by inflation and rising tariffs, consumer spending in the United States has remained relatively stable.
Market Reaction
Following this news, Nestlé’s stock experienced a notable increase, rising by 7.6% early on Thursday morning. The company remains committed to investing in its future, despite ongoing macroeconomic risks.
