Hershey says it has decided to cut back on jobs. The chocolate makers will cut down thousands of jobs globally from its workforce. This is prompted as many of the Big Food companies are reporting falling sales.
Hershey’s move to cut jobs will reduce the company’s global workforce by at least 15 percent. Hershey has around 19,000 full time and 1,650-part time employees all over the globe. Therefore many of the cuts that will be made are affecting the hourly staff outside of the United States.
The company started a “Margin for Growth” program that was set up in order to improve the company’s operating profit margins. It does this by cutting down administrative expenses and making improvements to the company’s supply chain. Hershey expects to see the savings benefits from this movement sometime around 2018 or a year or so after.
Yet Hershey’s move seems to follow other companies like General Mills and Kellogg who also cut employment to improve their operations. It would seem that the move to cut jobs and spending costs is necessary in order for the companies to stand up to competitors.
Instead of accepting a bid from snack company Mondelez, offered to Hershey just last year, the chocolate company decided to stand on its own. The current CEO Michele Buck started the “Margin for Growth” as the first big initiative the company has taken to reversing its losses. When Hershey hit its target sales for 2017, it was thanks to Buck who is responsible for the new path of strategy the company has recently taken. The company recorded a growth of 2-3 percent this year after the unveiling of its new Cookie Layer Crunch bar, the further expansion of the barkTHINS, and the introduction of the Reese’s and Krave snacks.
Buck made a statement on Tuesday. She said that these moves would allow Hershey more “flexibility to invest in certain parts of our business.”
Aside from her statement, Hershey also announced its long-term expectations for annual sales. Hershey is looking for a growth of at least 2-4 percent which is a bit lower than the predicted 3-5 percent from the year before.
These numbers are adjusted to fit what many Big Food makers are already aware of, their sales growth is steadily slowing. Many consumers are choosing healthier food options which are prompting large companies like Hershey and even General Mills to step up their game. Many on Wall Street have even brought up the suggestion for these companies to contemplate consolidation.
In her statement Tuesday, Buck said, “Our objective is to ensure that we always have the right level of innovation, marketing plans and consumer and customer expertise to drive net sales growth, especially in our North America confectionery and snacks business.”