Job loss at Cadbury UK as Polish state plans subsidies for corporation
Laure Akai | 26.12.2007 13:31 | Globalisation | Social Struggles | Workers' Movements | Birmingham
Capitalist greed leads corporation to cut labour costs to the bone. Will workers and consumers fight back, asks Laure Akai?
The Cadbury Company plans to shut down its Keynsham plant, which would result in 500 lost jobs. Another 200 jobs will be cut in Bournville. These jobs are to be transferred to Poland by 2010. (The company plans to start additional chocolate production in Poland in 2008. It has also signed a deal with Barry Callebaut in Poland to outsource some production. Callebaut outsources about 1/3 of Cadbury's total production.)
As Cadbury opens a new chewing-gum factory in the Walbrzych Special Economic Zone this January, the company has been negotiating for even more taxpayer sponsored financing and tax breaks to accompany the opening of a new chocolate factory. If all goes as they want, more jobs may eventually be transferred to Poland.
Officially, the company claims it has not chosen Poland for the building of a new chocolate factory and says it is still considering an investment in Slovakia instead. Like other corporations before it, Cadbury is busy playing a game with governments eager to claim they have “created new jobs” in their countries, a game in which the corporation asks for more and more tax breaks and subsidies and waits to see which country with outbid the other.
At the end of November, the Polish Ministry of Finance started to work on amending the law in order to allow Cadbury to get more subsidies. Currently, the government gives “grants” to companies in several industries which promise to create jobs in Poland. The Ministry claims that it is interested in supporting projects in food processing and paper – which is known to refer to potential Cadbury and Mondi investments. Besides a special “grant” Cadbury can count on other incentives. Their current investment in the Walbrzych Special Economic Zone included lost-cost land and property and significant tax breaks. Firms which qualify for state aid can also take special low-interest loans which can be to a large extent written-off.
Workers in the UK have been organizing against the job transfers and have considerable support from some local communities. But as director Ken Loach pointed out at a recent rally which he attended, you cannot count on companies to do the right thing out of conscience and some sort of corporate campaign should be organized. There are people who have already promised not to buy Cadbury products should the company go ahead with the planned job relocations.
The corporate greed at Cadbury's, just like at many companies, is fueled by investors looking to make a huge profit surge overnight. In Cadbury's case, the most troublesome investor is Trian Management Fund, run by billionaire investor Norman Peltz. Trian, together with Qatar Holding may only own 4.5%, but apparently it is a packet significant enough to make waves at Cadbury. Trian has called on Cadbury to restructure and economize in order to raise the value of shares by 60% within the next 2-3 years.
(Peltz is famous for trying to force himself and his financial ambitions on companies. It was Peltz who was behind the famous proxy battle at Heinz last year.)
Overall, Cadbury plans to cut 7,500 jobs in better-paid countries and close as many as 10 factories. Cadbury is also making plans for expansion in Turkey and Romania as well as in Poland. At the end of 2006, Cadbury decided to outsource IT and “back office” work (such as accounting). The company already moved about 500 jobs to a company called Genpact. Most of these jobs are in India but some are in Romania and China.
The jobs sent to Poland it seems is just the tip of the iceberg for the confectionery giant.
As Cadbury opens a new chewing-gum factory in the Walbrzych Special Economic Zone this January, the company has been negotiating for even more taxpayer sponsored financing and tax breaks to accompany the opening of a new chocolate factory. If all goes as they want, more jobs may eventually be transferred to Poland.
Officially, the company claims it has not chosen Poland for the building of a new chocolate factory and says it is still considering an investment in Slovakia instead. Like other corporations before it, Cadbury is busy playing a game with governments eager to claim they have “created new jobs” in their countries, a game in which the corporation asks for more and more tax breaks and subsidies and waits to see which country with outbid the other.
At the end of November, the Polish Ministry of Finance started to work on amending the law in order to allow Cadbury to get more subsidies. Currently, the government gives “grants” to companies in several industries which promise to create jobs in Poland. The Ministry claims that it is interested in supporting projects in food processing and paper – which is known to refer to potential Cadbury and Mondi investments. Besides a special “grant” Cadbury can count on other incentives. Their current investment in the Walbrzych Special Economic Zone included lost-cost land and property and significant tax breaks. Firms which qualify for state aid can also take special low-interest loans which can be to a large extent written-off.
Workers in the UK have been organizing against the job transfers and have considerable support from some local communities. But as director Ken Loach pointed out at a recent rally which he attended, you cannot count on companies to do the right thing out of conscience and some sort of corporate campaign should be organized. There are people who have already promised not to buy Cadbury products should the company go ahead with the planned job relocations.
The corporate greed at Cadbury's, just like at many companies, is fueled by investors looking to make a huge profit surge overnight. In Cadbury's case, the most troublesome investor is Trian Management Fund, run by billionaire investor Norman Peltz. Trian, together with Qatar Holding may only own 4.5%, but apparently it is a packet significant enough to make waves at Cadbury. Trian has called on Cadbury to restructure and economize in order to raise the value of shares by 60% within the next 2-3 years.
(Peltz is famous for trying to force himself and his financial ambitions on companies. It was Peltz who was behind the famous proxy battle at Heinz last year.)
Overall, Cadbury plans to cut 7,500 jobs in better-paid countries and close as many as 10 factories. Cadbury is also making plans for expansion in Turkey and Romania as well as in Poland. At the end of 2006, Cadbury decided to outsource IT and “back office” work (such as accounting). The company already moved about 500 jobs to a company called Genpact. Most of these jobs are in India but some are in Romania and China.
The jobs sent to Poland it seems is just the tip of the iceberg for the confectionery giant.
Laure Akai
Homepage:
http://libcom.org/news/
Comments
Hide the following 4 comments
Any details...?
27.12.2007 12:09
so the message would be more reliable?...
(I am transferring this news to Polish indymedia, but at the moment it desn't seem to be clear what kind of subsidies you mean)
dziedzice aat gmail.com
Arrow
e-mail:
dziedzice@gmail.com
More information about subsidies
28.12.2007 05:08
To explain (if English speaking people are interested), the government regularly subsidies corporations by means of:
- grants
- special loans guaranteed by the state through the bank BGK (with low interested and which entitle the borrower to tax write-offs)
- tax relief
- discount land sold by the state
Currently, the law only allows direct subsidies (grants) in several areas, although these cover a wide range of businesses:
- the automobile and aviation industries
- electronics
- research centers
- biotech
- service industry centers (ie call centers or accounting outsourcing)
Finance Minister Pawlak is considering amending the law to include the food-processing and paper industries.
In the last two years, the government has awarded 760 million zloties in direct grants to corporations. Among the big recipients were Dell (in Lodz) and LG near Wroclaw. LG received a total of 401.7 million zloties in aid in 2006. The government awarded over 6 billion zloties in state aid 2006. Some of the aid goes to big international corporations. The largest recipient of state aid however is PKP Polish railways.
akai
Homepage:
http://www.cia.bzzz.net
additional info
28.12.2007 15:35
(A) Sab x
Union cooperation
28.12.2007 23:47
What does "not cooperating with Cadbury" mean?
Can the union have an influence on employment in the new factories? Are they going to stop Cadbury from hiring people? Especially in other cities? I think even in Warsaw the answer will be "no". They let go a lot of people here in Warsaw. (Something like more than 50.) They were threatening to close the factory here and decided to invest instead. The unions would be only doing their job if those laid off people were eventually rehired.
Although unions in companies act differently, and there are more radical Solidarity branches, just like there are completely yellow ones, one can look at the situation in Opel as typical. The local Solidarity in Gliwice at the time when there were problems in Opel Germany (3 years ago) but up some poster in Solidarity with the workers but didn't stop work. There is evidence that further some members of Solidarity worked to undercut the German workers and get jobs in Poland. Swedish unions at SAAB were also doing this. (There was at the time some talk that there was even some agreement between Polish and Swedish unions to negotiate - although since that time some people have denied this and it is impossible to confirm now.) Anyway, the cost of one worker in Poland was about 15% of the cost of one worker in Germany.
(Opel got a big tax break to invest in Gliwice. They got 10 years tax-free, 10 years at 50%.)
Right before the German situation, when they wanted to fire 12,000 workers and move production, the Polish workforce was under seige. 350 people were fired from Polish Opel. It was a huge blow to Solidarity. With the situation in Germany, job creation was promised. Do you think the Solidarity leaders said no to this? These are the sad facts; the unions are under immense pressure from the side of the companies and the workers. When the union at Opel later was demanding some wage increases, the company threatened to move jobs to Ukraine and to China. So unfortunately, even though the unions may have been in solidarity with the workers from Bochum, they didn't fight to keep jobs there, they didn't refuse to do those jobs. I doubt that anybody can expect that of a mainstream union like Solidarity.
Of course many of the Bochum jobs came to Poland but Opel had enough with the unions and try to avoid dealing with them by hiring people through WorkService (temp agency) and subcontractors. (Our comrade works there - some maybe he'll make a report we can translate.)
We suppose when it comes to Cadbury, the factories will try to recruit non-unionized labour and Solidarity will try to unionize them. All the time the company will probably hold the threat of "moving to Slovakia" over the unions to keep them in line.
I'm absolutely sure that this is a worldwide problem for workers' movements and it would be good to develop some code of ethics here. Perhaps some radical unions, which tend to be tiny, will look at situations like this as some sort of scabbing, because it plays a similar function, but in the end, I don't imagine Solidarity doing anything concrete and direct in solidarity except sending words of solidarity. It's true that symbolically the thought counts, but ultimately people are going to take those jobs - if not in Poland, then in Ukraine or China. The workers' movement needs to develop international direct action tactics quickly!
akai
Homepage:
http://www.cia.bzzz.net