Last week, Coca-Cola announced that it would cut thousands of jobs and establish plans to restructure its business operations in response to the falling demand from bars, restaurants, and related venues’ decision to close during the Wuhan virus pandemic.
4,000 of the beverage company’s employees in in the US, Canada, and Puerto Rico are being offered “voluntary separation”. Workers in other countries will likely be offered similar emergency benefits, but there are no official numbers of benefits listed so far.
The company also warned staff about the potential for mandatory reductions, although it noted that the voluntary reductions would place limits on the number of people affected. The beverage titan had 86,200 employees at the start of 2020. It did not state how many jobs would ultimately be lost, and instead revealed that it would “share more information in the future”.
Coca-Cola is known for its products such as Fanta, Sprite and Schweppes. It joined a number of other global companies that have implemented job cuts in the aftermath of a reassessment of their plans.
Harry Dempsey and Alistair Gray of the Financial Times noted that this is a “trend that threatens to prolong the economic downturn triggered by the pandemic.”
Last week, American Airlines announced it would slash 19,000 jobs at the start of October. The British sandwich chain Pret A Manger revealed that it would cut 2,890 jobs, which represents a third of its workforce.
On August 28, 2020, MGM Resorts announced that it would be laying off 18,000 workers that were previously furloughed. The company claimed that the employees would be placed on a “recall list” and get their jobs back as facilities reopened.
The severance plans Coca-Cola is offering are estimated to cost up to $550 million. Right now Coca-Cola is suffering the sharpest fall in the company’s quarterly sales in over a quarter of a century.
Indeed, domestic demand for Coca-Cola products has remained strong. However, the company has been negatively impacted by the shutdown of social venues ranging from movie theaters to stadiums, where it usually rakes in nearly half of its yearly revenues.
Like many other companies in the U.S., Coca-Cola has been forced to tighten its belt due to Wuhan virus related lockdowns. Policymakers will need to rapidly draw up plans to get the economy up and running again. If not, similar job cuts will continue and more Americans will face economic hardship.