PepsiCo Is Laying Off Corporate Employees As the Company Commits To 'Relentlessly Automating' (businessinsider.com)

PepsiCo is kicking off a four-year restructuring plan that is expected to cost the company hundreds of millions of dollars in severance pay. "This week, PepsiCo employees in offices including Plano, Texas, and the company's headquarters in Purchase, New York, were alerted that they are being laid off," reports Business Insider, citing two people directly impacted by the layoffs.

The latest job cuts come after CFO Hugh Johnston told CNBC that the company plans to lay off workers in positions that can be automated. CEO Ramon Laguarta said on Friday that PepsiCo is "relentlessly automating and merging the best of our optimized business models with the best new thinking and technologies." From a report: This week, PepsiCo employees in offices including Plano, Texas, and the company's headquarters in Purchase, New York, were alerted that they are being laid off, according to two people who were directly impacted by the layoffs. These two workers were granted anonymity in order to speak frankly without risking professional ramifications. At least some of the workers who were alerted about layoffs will continue to work at PepsiCo until late April as they train their replacements in the coming weeks, the two workers told Business Insider.

By PepsiCo's own estimates, the company's layoffs are expected to be a multimillion-dollar project in 2019. Last Friday, PepsiCo announced in a filing with the Securities and Exchange Commission (SEC) that it is expected to incur $2.5 billion in pretax restructuring costs through 2023, with 70% of charges linked to severance and other employee costs. The company is also planning to close factories, with an additional 15% tied to plant closures and "related actions." Roughly $800 million of the $2.5 billion is expected to impact 2019 results, in addition to the $138 million that was included in 2018 results, the company said in the SEC filing.

Comments

My job can't be automated

[110010001000]

I am a professional chess and Go player. Fortunately for me I am safe from automation.

Re:My job can't be automated

[Kjella]

I am a professional chess and Go player. Fortunately for me I am safe from automation.

The funny thing is they are. Humans haven't won at chess since Kasparov lost to Deep Blue, but Carlsen is making more than a million dollars a year as the world champion and is approaching $10 million in career earnings. You'd better be in the absolute elite though, it's like all sports the top athletes bring in way more than then second-best and being 100th best is worth almost nothing.

Re:My job can't be automated

[ShanghaiBill]

A new rookie to the NFL can expect to make around $365,000 per year

99.9% of wannabe football players never make it to the NFL. The vast majority earn nothing.

Re:My job can't be automated

[Anonymous Coward]

99.9% of wannabe football players never make it to the NFL. The vast majority earn nothing.

Here is a non political suggestion I wish I could see made reality. Make a serious part of education the understanding and interpretation of risk and probability. If people understood, beyond any doubt, that becoming a top tier star of any form was incredibly unlikely, and instead made realistic plans and _worked_ to achieve them, we would be so much better off. It would also make the average Joe far harder to manipulate.

Re: My job can't be automated

[TuballoyThunder]

One can make that argument about any entertainment activity. Some people enjoy watching eSports, which seems absolutely boring to me. Other people enjoy opera. I don't see a problem having a diversity of entertainment options.

The issue for me is using tax dollars or issuing municipal bonds to subsidize profit-making sports teams. They should go to the corporate bond market if they need money.

Re:My job can't be automated

[C0C0C0]

99.9% of wannabe football players never make it to the NFL. The vast majority earn nothing.

... and those that do have an average career of 3 years, and significant risk of permanent brain damage.

Re:My job can't be automated

[MBGMorden]

To a large degree I agree with this.

I think part of the problem (at least for my generation growing up in the 80's and 90's) was there was a big push on this motivational stuff of "Don't let anybody tell you you can't make it.", along with inspirational photographs and stories of pop stars, pro-athletes, and billionaires.

While the motives were admirable and there is some element of truth there, the reality is that MOST people WON'T become those things. Even if they work hard for it. Most of those things are a combination of hard work (you can do that), genetics (you may or may not have lucked out there), and pure random luck (you have no control over that).

So sure, if you want to try to become those things have a shot, but there was always be a realistic, more mundane, and far more likely backup plan for what you're going to do with your life.

I personally grew up poor. My mom didn't work until I was about 10 years old. My dad dropped out of school in the 8th grade and worked construction. Until my mom went to work we lived in a run-down mobile home where I shared a room with my brother sleeping on a mattress laying on the floor. They didn't try to get me to be rich: they just insisted that I work hard in school, go to college, and get a regular job. That's what I did. I went to an in-state public school, got a STEM degree, graduated, and got a good but mundane job. I had my student loans paid off in 10 years and make around $80k per year. I'm not rich, but I'm doing pretty good, and focusing on realistic goals helped me get there.

Bonuses

[alexgieg]

In other words, all the involved will receive huge quarter bonuses for a few years, then once it badly backfires they will have departed with golden parachutes, while PepsiCo fills for bankruptcy, right?

Re:Bonuses

[apoc.famine]

I think you underestimate how much mid-level busywork can get automated in most businesses. In my own organization, I can think of a good half-dozen people who are going to be missing half their workload once their managers decide to get on the automation train.

One person spends a good day a week doing data entry into one system of data we already have in another system. Then they spend another half day dealing with the data entry errors causing problems down the line. Even if we just get them access to the one system and a script to change the data format and upload it into the other system, we're chopping a day and a half of work down to about 15 minutes of work. (Ideally we'd just link the systems, but that's a bit bigger project.)

There are piles of things like this in every organization.

It's quite possible that there are a few visionary people now in management positions who know full-well the rot and waste of time within the organization, and who are going to try to slim it down. Depending on how thoughtful they are, this could be a massive cost savings with minimal impact to the day-to-day operations.

Re:Bonuses

[vux984]

One person spends a good day a week doing data entry into one system of data we already have in another system. Then they spend another half day dealing with the data entry errors causing problems down the line.

LMAO. You are so right.

On the other hand, it's not so simple a problem to solve; i've seen it tried. Sure it sounds like its a few lines of script... but inevitably there's a bunch of domain knowledge and data transformations being applied; and you end up 100k into developer time and it's still not quite right because the process was poorly documented, the consultants are money grubbing assholes, and the people with the information to fix it are the ones being fired so they're not exactly happy to help assuming they stuck around. Then it turns out you need a data feed from yet another system...

And the whole thing needs a highly technically skilled babysitter now to watch the logs and fix the problems in the automated process. He only needs 30 minutes a day instead of 1.5 days to do the data shunt, but he costs 10x as much; so the return on investment is taking a lot longer, especially after you factor the initial dev cost.

  And then one morning the data format from one of the feeds changes without announcement from the producer (at the very least another department you don't have any control over... or often a customer, vendor, other 3rd party; and the whole thing implodes... and the consultants are billing doubletime to try and fix it. :p

Wait a second...

[alzoron]

At least some of the workers who were alerted about layoffs will continue to work at PepsiCo until late April as they train their replacements in the coming weeks

Are they training the robots?

Re:Wait a second...

[Livius]

Automation isn't necessarily all or nothing. Automation tools might allow a team of ten experienced and expensive workers to be replaced with a team of three uneducated minimum-wage workers. Those three will still need a bit of training.

Re:Wait a second...

[quantaman]

Automation isn't necessarily all or nothing. Automation tools might allow a team of ten experienced and expensive workers to be replaced with a team of three uneducated minimum-wage workers. Those three will still need a bit of training.

I think that's backwards. The jobs eliminated by automation are typically the simpler and more repetitive ones, but even though those tasks are now automated you still need people around who understand those tasks well enough to ensure the automation is working properly.

So you're more likely to replace ten uneducated minimum-wage workers with three experienced and expensive workers.

If there is automation-related training of replacements I suspect they're training the technicians who know how to maintain the automated process with the tasks that are being automated.

Of course, this is /. so I'm mostly speculating and don't have a lot of actual experience.

I retrained

[Anonymous Coward]

After I aged out of my engineering job, I knocked off a MD. it was four years of memorization. All it takes is understanding of basic science.

I wish I just went directly into medicine. I'd be rich and it would have a lot easier than engineering. My colleague has an undergrad in art. The other in accounting!

Re:I retrained

[Anonymous Coward]

Well, there is no lack in demand for creative accountants, you have to give him that.

Re: I retrained

[Anonymous Coward]

Should we tell him that there will be a time when we lower H1B visa restrictions and import docs who have been educated to greater levels and at a tiny fraction of the cost he has, so are far more inexpensive to employ?

That's why there is such a cry in the tech sector about "lack of interest" in tech related fields in the US by students...when there actually isn't. It's just cheaper to get those workers from abroad. Workers who have grown up and been educated in economies with much lower costs of living and education.

The US could be pumping out 100% stem students (and lowering costs for employers through an over supply of workers) and still NOT reach the level of cheapness that tech sector empoyers who are crying for few restrictions on immigration. And they aren't even the least bit ashamed by it. They build a company in the US do to the legal and trade framework doing so gives them access to, then turn right the feck around and hire from abroad and laugh all the way to the bank, knowing US consumers will still likely buy their products. Like idiots.

Re:I retrained

[supercell]

I call bullshit. You don't age out of engineering. No Med-school is going to accept a 55 year old undergrad.

"workers" ?

[IGnatius T Foobar]

How much talent does it take to sell diabetes-inducing sugar water anyway? "Automation" is is another word for "contractors in India".

train automated replacements?

[sdinfoserv]

The statement is BS.. You're not automating if " layoffs will continue to work at PepsiCo until late April as they train their replacements".. You don't train your automated replacements. You're outsourcing existing high priced labor to cheap (aka illegal?) labor.

Re:train automated replacements?

[93 Escort Wagon]

Yeah, the summary is pretty bad. The layoffs are part of a “restructuring” and are more or less unrelated to the additional announcement that the company is “also relentlessly pursuing automation”.

Re:train automated replacements?

[Darinbob]

Maybe they're automating the layoff process?

Re:Looking forward...

[xack]

The “cost savings” shold be taxed for the obesity effects their products cause.

Sounds like

[jmccue]

Sounds like a method of getting rid of all the old people working there, then in a year or two will say they failed and hire young people. Sounds like a good plan to avoid all those pesky US regulations.

Re:Management says "Relentless"

[HiThere]

You underrate the skills required by management. A good manager is nearly as rare as a good plumber. Both exist.

Re:Management says "Relentless"

[ShanghaiBill]

but they really mean that their jobs are safe

RTFA. These are white collar "corporate" jobs being eliminated. They aren't laying off workers at the bottling plants.

Re:A real UBI

[drinkypoo]

You want a Universal Basic Income? Buy shares in PepsiCo. [...] UBI for shareholders of the ETF.

Do you find yourself confused by the world "universal"?

Re:Maybe they can put that savings...

[SeaFox]

Personally I haven't seriously drank pepsi products in over a decade and this decision will just make that easier to swallow, heh heh.

So you completely missed the "retro" soda trend where makers bottled limited editions of their old sodas using real sugar?
You don't even have to do that. Just check your local grocer's "ethnic" foods section for the Mexican versions of your favorite soda. It wont be HFCS. My closet grocer doesn't even segregate them that way. Bottled Mexican Coke is in the same cooler as all the other 20oz-1 L bottles. Normally with the Boylan, Jones, and other more niche drinks.

Re:"train their replacements"

[PPH]

'training' their robots

It's R2D2's brother, H-1B.

In civilized countries automation = shorter week

[Uberbah]

...not just more profits for robber barons and vulture capitalists.

German workers win right to 28-hour working week

German metal workers have won the right to a 28-hour working week in a landmark deal between employers and Europe's biggest union.

Under the deal, workers will be allowed to reduce their working week to just 28 hours for a temporary period of up to two years. Employers will not be able to block individual workers from taking up the offer.

It's not India either

[rsilvergun]

They're automating a ton of back office work that used to be done by people. The jobs aren't going overseas. They don't exist anymore.

This is gonna be "interesting times" as more and more work is automated. It's the #1 buzzword at every tech place I know of. And it's happening faster than new jobs can be created.

Good thing millions of unemployed and unemployable people are never a problem for long term social stability.

Re:It's not India either

[ShanghaiBill]

And it's happening faster than new jobs can be created.

No it isn't. We have record low unemployment, and productivity growth is sharply lower than in the past.

A big problem in our economy is that automation is happening too slowly, causing weak wage growth.

There are not pesky US regulations

[rsilvergun]

seriously. Yes, age discrimination is technically illegal. You'd have a better chance getting H1-B restrictions enforced than age discrimination rules. There is literally nobody enforcing it. Remember, it's not a law if it's not enforced.

And this is automation. They're not hiring young folk. They're not hiring _anyone_. The jobs are just gone. Poof.

Re:News for ...?

[Potor]

At the previous turn of the millennium, Adolf Loos too though that automation would save us from soul-crushing labour and lead to lives of leisure. Boy was he wrong. But he was just an architect, so we can forgive him.

Re:Looking forward...

[lord_mike]

People aren't drinking as much soda pop anymore. The sugar stuff is bad for you with lots of calories. The diet stuff is turning out to be even worse for weight and blood sugar. Flavored waters are now the thing. I'm sure pepsi has some skin in that game, too, but not as much as they do traditional soda pop.