PARIS, March 29, 2001 (PRIMEZONE) -- The European industrial reorganization of the Biscuit Division was presented on Thursday, March 29, 2001, to the European Committee (Information and Consultation Committee). This body brings together the various groups representing employees in Europe of Group Danone, and was presided over by Franck Riboud, CEO of Group Danone.
(I)- Principles of Reorganization
This reorganization is necessary to protect manufacturing competitiveness, in an environment where the manufacturing base is under-utilized and not specialized enough, and in an industry where competition is consolidating.
The reorganization respects the values of the Group in relation to balancing its economic interest with employee and community interests.
The specific guidelines, to minimize the employee and community impact were:
-- To favor the maintenance of production in each country
-- To favor "in-house" production over subcontracting
-- To implement the project over 2-3 years so as to facilitate the
retraining or re-employment of the employees concerned
The industrial principles followed were:
-- To develop the sites which can increase volume and which have the
most favorable cost structure
-- To rationalize the production through a specialization at each
site, which in turn, will result in a higher utilization of lines
-- To use a network of smaller, specialized sites, for which transfer
of production to other units would not have had any significant
contribution to cost reduction
(II)- A Reorganization by Country and by Technology to Protect Industrial Efficiency
The Biscuit Division in Europe comprises 36 factories and 15,000 employees in 13 countries. The production capacity is 1,400,000 tons and current production is 600,000 tons using 15 different technologies and 249 lines.
This project is designed to enhance the competitiveness of the Biscuit Division on a European scale with:
-- Development of large capacity factories with more than 50,000
tons of production
-- A network of smaller specialized factories which would continue
their efforts to improve efficiency
As a result for the 36 factories:
-- 5 sites would be developed without major structural investment in
view of their ability to significantly increase volume of
production and their competitive cost structures.
-- 20 sites of smaller capacity would not be impacted by the project
because they manufacture for a local demand; and/or have specific
technologies
-- 5 sites would be reorganized, with limited reductions of employees
to protect their industrial competitiveness
-- 6 sites, in 5 countries, do not have the capacity to be developed
at a competitive cost and would be closed. Production from these
sites will essentially be transferred to another site in the same
country
(III)- Review by Country
France
LU France produces 183,000 tons in 12 factories (5 biscuits, 3 Bread substitutes, 4 Soft Cakes) with 4,030 employees.
-- 2 factories (La Haye Fouassiere and Cestas) would be developed
resulting in a doubling of production to 50,000 tons at each site
-- 2 factories (Calais and Evry) would be closed, as they are either
cost disadvantaged or cannot be developed easily
-- 1 factory (Chateau Thierry) would be restructured to restore
competitiveness
-- 3 factories (Granville, Toulouse and Vervins) are cost competitive
and would therefore not be impacted by the project
-- 4 factories (Champagnac, Besancon, Charleville and Jussy) are
specialized in ranges of products, and in the competitive context,
would be maintained with a reorganization
Across, biscuits, bread substitutes and soft cakes, 236 positions would be created and 806 positions lost.
Italy
The Capriata factory would double production, increasing from 22,000 tons to 47,000 tons from the transfer of volume from the Locate site, which would be closed. 93 positions would be created in Capriata and 274 would be lost in Locate.
Belgium and Holland
The Herentals site (Belgium) would increase volume from 56,000 tons to 86,000 tons from the transfer of volumes from Beveren, which would be closed. 225 positions would be created at Herentals and 412 positions lost at Beveren, which is less than 50 kilometers away
Dordrecht (Holland), which produces 14,000 tons on 4 different technologies, is an old site, in a built-up area. This site would be closed, and part of the production transferred to Herentals. 211 positions would be lost.
Hungary
Biscuit production would be increased. The modern factory of Szekesfehervar, which produces 7,000 tons, has the infrastructure to reach 25,000 tons without major structural investment. The site would receive the volume produced at Gyor. 270 positions would be created at Szekesfehervar. The site at Gyor, in the middle of a built-up area, would be closed.
UK
The factories of Aintree and Wigston would have production methods changed, mainly as a result of strong seasonality, and this would result in a loss of 180 positions.
In Ireland, the Tallaght plant produces half of its production for the Irish market. This site would be maintained with a substantial reorganization to address the high cost structure. 100 positions would be lost.
The Economic Objectives of the Restructure:
In the scope of the reorganization project, as presented to the European Committee, the economic objectives of the restructure are as follows:
-- To increase the capacity utilization from 43% to 57% -- To increase the average factory size by 56% -- To reduce industrial costs by 16% -- To reduce the number of lines by 28%
This project would be implemented by June 2004.
The actions of the Group will be taken after consultation with the relevant employee representatives and in the context of the laws of each country and with respect to the Group's international labor agreement.
(IV)- Commitment to Employees and Communities Impacted by the Reorganization
Group Danone will provide assistance both to employees impacted, as well as, to the local communities impacted.
Employee Assistance
Employees impacted by the reorganization will receive a range of assistance provided by the Group, which will include:
-- Access to re-employment in the factories, which will have
positions created as a result of the restructuring
-- Outsourcing assistance which will include developing a personal
and professional profile, training, financial planning, and
financial assistance
-- Early retirement where appropriate
-- On-site advisory service
A steering committee will be created in each of the subsidiaries impacted, in association with the relevant employee representatives.
Community Assistance
Group Danone will propose to local officials and authorities in the communities impacted a "social contract. " This contract will be developed in partnership with these local groups to define a program of employment creation in the community. The objectives of this contract will be to attract companies to the communities affected so as to create employment, or to support projects of local businesses.