Soft drink firm closes down five facilities

REPORT FROM BUSINESSWORLD Publicly listed soft drink manufacturer Cosmos Bottling Corp. on Monday stopped running five facilities to consolidate operations with the plants of parent company Coca-Cola Bottlers Philippines, Inc. (CCBPI). The company said it closed down Cosmos’ manufacturing facilities in Cauayan, Isabela; San Jacinto, Pangasinan; San Fernando, Pampanga; Iloilo, and Cebu. The production of these plants has been transferred to Coca-Cola plants, as specified under a toll-manufacturing agreement. "Cosmos will start production in Coca-Cola plants effective Tuesday. Cosmos management has to decide what to do with those facilities. They have to properly disclose to their stockholders," Coca-Cola Export Corp. vice-president for public affairs and communications Jose Bayani D. Baylon said in a telephone interview. He said that 1,500 employees were affected by the move, 900 of whom opted to retire. Meanwhile, 600 workers will be reabsorbed, he said. "They all received separation packages," Mr. Baylon said. Under the package, employees were given separation pays amounting to two months’ worth of salary for every year of service. Medical benefits will be provided up to December 2008, Mr. Baylon said. Asked if other Cosmos plants would also be closed down, Mr. Baylon said there was "nothing more to close." "We want to maximize our more efficient CCBPI plants than the old Cosmos plants," he said. The move comes months after Atlanta-based The Coca-Cola Co. assumed full ownership of CCBPI. Last February, The Coca-Cola Co. bought out former CCBPI partner San Miguel Corp.’s 65% in CCBPI for $590 million. CCBPI, which owns and manufactures Coca-Cola brands in the country, also owns Cosmos, Philippine Beverage Partners, Inc. (PhilBev) and bottled water brands. The move had earlier raised questions on the fate of Cosmos, a brand that was created by the Concepcions and later bought by CCBPI. Early this year, Coca-Cola officials had said that Cosmos’ future was being studied and that there was as yet no plan to export the brand to other Coca-Cola markets. Officials also said that there was as yet no plan to sell Cosmos. In a statement, Mr. Baylon said that along with the ceasing of the operations of Cosmos’ plants, The Coca-Cola Co. has also decided to transfer the production requirements of PhilBev’s Navotas plant to its other facility in Imus. "As a business organization, we want to further drive both our market and financial growth by refocusing our organization towards market development and customer service," he said. Cosmos and PhilBev sales employees will be redeployed to other specified CCBPI installations. Those who cannot be redeployed will receive a "good and fair" separation package, he added. Employees who wish to become distributors or dealers will be assisted by CCBPI, Mr. Baylon said. He added that the move "follows a thorough review of [the company’s] internal operations and market growth opportunities." The company would be shifting its focus on sales, with the hiring of 2,000 new sales associates, who would "provide greater quality service to customers and drive growth through its expanded portfolio." Mr. Baylon said that after the restructuring of the firm’s operations and the augmentation of the sales force, CCBPI would directly employ 7,367 people in the country. The Coca-Cola Co. said CCBPI achieved an 11% growth in unit case volume in the second quarter. "Results in the quarter reflect early signs that the initiatives to improve business performance are starting to gain traction," it said. — Ruby Anne M. Rubio/BusinessWorld