Shrinkage to Economic Life
Submitted by Steven Kaszab
The Pandemic has thrown the global markets and economic flow into the dumpster. What was, seems to becoming a thing of the past, with corporations amalgamating their manufacturing processes into singular locations. Labor costs, which ruled the day before the pandemic have been set aside allowing logistics, energy and shipping costs to surface as the new economic principle. Therefore many manufacturing plants and their staff are being moved or eliminated. Some examples follow…
De Fehr Furniture is shutting down a Winnipeg, Canada production plant, and more than 200 workers will be looking for work. In a notice posted to its website this week, De Fehr said it will end case goods manufacturing at its facility at 125 Furniture Park this summer. The move will affect 224 employees, the company said.
“The decision to cease operations was the result of severe supply chain disruptions and raw material sourcing challenges over the past two years, combined with balancing the pace of price increases that were passed along to customers,” the May 4 notice reads. De Fehr said the facility will officially close on Aug. 10.
“This wind down will be carried out in a controlled and orderly manner, and all obligations to suppliers and employees will be honored as we work to complete and fulfill customer orders on hand,” the notice reads. Affected employees will be offered support programs through the changes, the company added.
Nestle has announced its confectionery factory in Newcastle(Barbados) is to shut with the loss of 474 jobs. The global food manufacturer said it was holding talks with employees at the Fawdon plant but the focus was now on closing it in 2023. A spokeswoman said the majority of production currently in the North East would move to Halifax, West Yorkshire.
The GMB and Unite unions condemned the move and said closing “a profit-making factory” was “unacceptable”. The future of the former Rowntree plant had been in doubt since Nestle announced in April that it wanted to end production at the site.
Fawdon has been producing confectionery since 1958 but, according to unions, the manufacture of Fruit Pastilles will switch to the Czech Republic and Toffee Crisps will be made in Poland. In recent years the factory has made other popular brands like Rolo’s, Munchies and Matchmakers.
In a statement, Nestle said: “From the outset we wanted to provide adequate time and space for these discussions and it is only right that they are held directly with our employees and trade unions and not in public.
A feared global economic downturn is forcing corporations to consolidate their operations or eliminate those deemed unnecessary. Shipping and logistic costs must be reduced as much as possible, so facilities located in non central transport hubs will be effected. A move from the Asian Manufacturing Hub to that of Mexico or Brazil has been happening this past decade, but now the momentum is unstoppable. If your head office and primary manufacturing is in the EU, that is where relocation will happen. Manufacturing facilities within economically isolated area’s like islands will face the danger of closing. Further complications is the fear of global recession, making the maximization of corporate profits the more important. Yara Trinidad is closing one of its plants also, blaming decreased sales with increased costs in energy. Layoffs to come.