Bad week for food manufacturing: is it a trend?

By Alice Foster contact

- Last updated on GMT

Last week: General Mills confirms closure of Jus Rol factory with loss of 265 jobs
Last week: General Mills confirms closure of Jus Rol factory with loss of 265 jobs

Related tags: Job losses, Employment

Fears of further food and drink manufacturing job casualties are growing after hundreds of job losses were announced by Bakkavor, General Mills, Asda and other firms last week.

But are these fears justified? Food and drink industry commentators Julian Wild and Clive Black put the serial job losses into perspective.

Wild, head of the food team at Rollits solicitors, said retailers and manufacturers were “under enormous price and cost pressure” ​while increased sales and market share were hard to come by.

As a result, improved profitability comes through reducing costs and eliminating underperforming or loss-making activities,” ​Wild said.

‘Part of an ongoing move’

To that extent I would be certain that these are not one-offs, but part of an ongoing move to be more efficient and have a lower cost base.”

Job cuts announced last week included 265 General Mills factory jobs, hundreds of Asda head office jobs and up to 100 Marine Harvest Scotland jobs.

In addition, Bakkavor announced that more than 300 employees were at risk of redundancy and Moy Park confirmed that 19 employees were affected by a site closure.

Wild suggested that the large number of job losses announced in a single week could be down to the time of year and post-Christmas dip.

‘Facing different challenges’

These are all different businesses facing different challenges, but the first quarter of the calendar year is always the flattest for the food sector post-Christmas and before the summer and the next seasonal build-up,” ​he said.

It is a time when businesses often look at their cost base and decide to cut costs, which inevitably means jobs.”

Wild said there was likely to be more rationalisation in the months ahead, noting that many of the companies shedding jobs in the UK were owned by groups overseas.

I would say that industry consolidation is here to stay and we will continue to see plenty of it, particularly in commodity and more mature markets where growth is harder to come by,” ​he said.

Meanwhile, Shore Capital analyst Clive Black said the hundreds of job losses announced last week did not represent a significant shift for the food industry.

‘Pressure points in food system’

For the individuals involved, the job loss announcements are clearly very important and symptomatic of the pressure points in the UK food system,​he said.

Whilst this is so, in the big scheme of the things they do not move the dial with respect to the mass-employment nature of the industry.”

Looking forward, Black predicted “never-ending change”​ in the UK’s highly dynamic food and drink industry.

Pressure is rising upon supermarket groups to be much more competitive and they have to cut their cloth accordingly,” ​he said.

More broadly there is a continuum of change in supply chains that leads to both job creation and destruction. We expect foodservice to be a source of employment generation in the medium-term.”