North American beverage and snacks giant PepsiCo is expected to restructure its headquarters positions, reported The Wall Street Journal on December 5. The PepsiCO layoffs will reportedly affect hundreds of jobs as corporations prepare themselves for recession 2023.
According to people in the know, the cuts will affect the company’s beverage divisions in North America which have headquarters in Chicago and Plano, Texas. The PepsiCo layoffs signal that corporations beyond tech and media are preparing for bearish markets as geopolitical instability and high inflation eat into profits. The staggering amount of tech layoffs this year signal an impending recession.
The PepsiCo Layoffs
In a memo sent to staff that was viewed by the WSJ, PepsiCo told employees that the layoffs were intended “to simplify the organization so we can operate more efficiently.”
- The PepsiCo layoffs will impact the beverage business much more as the snacks department has already been downsized with a voluntary retirement program.
- As of December last year, PepsiCo had employed over 300,000 people worldwide. According to a regulatory filing, almost 40% of those are located in the US.
The America beverage maker also has Quaker Oats, Gatorade, Frito-Lay, and Tropicana amongst others. Food and beverage makers are worried about increasing cost of raw materials, transport, and supply chain issues.
In October, PepsiCo has hiked its full-year revenue forecast for after its sales increased, despite increasing its prices. Despite optimistic forecasts, some business units have seen shrinking volumes as customers face shrinking budgets and high inflation.
The results suggest that customers have cut down on snacking and might be tightening budgets in preparation for recession 2023.
Amazon Layoffs
Another company that is preparing for a bigger round of layoffs in e-commerce giant Amazon. The company was rumored to cut nearly 10,000 jobs but according to recent reports the tech giant will lay off nearly double the number.
- Amazon layoffs are expected to affect almost 20,000 employees across divisions, including distribution workers, tech teams and corporate executives.
- Sources with direct knowledge of Amazon layoffs mentioned that the restructuring exercise will affect staff across all ranks and will be evaluated on work performances before their roles are shelved.
- “There is no specific department or location mentioned for the cuts; it is across the business. We were told this is as a result of over-hiring during the pandemic and the need for cost-cutting as the company’s financials have been on a declining trend,” an anonymous source told Computer World.
Employees are fearful of upcoming changes, as people in the know mention that affected workers will only receive a 24-hour notice before they are let go.
Those affected by Amazon layoffs will be given severance pay according to their contracts.
Why are companies conducting layoffs?
One of the main reasons for downsizing is the bleak profit outlook for most companies. As recession 2023 comes closer, companies are taking preventive measures to avoid bleeding money. Famed American economist Nouriel Roubini believes that the US recession has arrived.
In today’s bearish market, most organizations have woken up to the blunders they made during the pandemic. Overhiring, due to a positive growth forecast, has resulted in excess staff and lesser revenues.
Dwindling profit margins and falling stock prices have caused companies to re-evaluate strategies and adjust course as high inflation eats into profits.
