Anheuser-Busch announced today (though the press release is on the InBev website, not A-B’s nor the new ABIB website). The plan is to cut around “1,400 U.S. salaried positions in its beer-related divisions, affecting about 6 percent of the company’s total U.S. workforce,” three-quarters of which were at A-B HQ in St. Louis. Also, 250 vacant position will now not be filled and 415 independent contractors will also be terminated.
From the press release:
“To keep the business strong and competitive, this is a necessary but difficult move for the company,” said David A. Peacock, president of Anheuser-Busch. “We will assist in the transition for these employees as much as possible. The people of Anheuser-Busch dedicate themselves to the business, and we appreciate all of their contributions.” The company will provide employees severance pay and pension benefits based on age and years of service. Employees also will be offered additional benefits during the transition, including outplacement services.
The announced workforce reductions are in addition to the more than 1,000 U.S. salaried employees company-wide who accepted the company’s voluntary enhanced retirement program, which closed November 14 and provided special benefits for eligible employees retiring by the end of 2008. The retirements were part of planned cost reductions of [$1 billion dollars US], called project Blue Ocean, announced by Anheuser-Busch in June 2008. At that time, the company announced plans to reduce its company-wide U.S. full-time salaried workforce of 8,600 by 10 to 15 percent before the year end. The company’s other Blue Ocean cost reductions remain on track. Bargaining unit employees at the company’s 12 U.S. breweries are unaffected by the reductions announced today.
“Managing our costs is important in building and maintaining a successful business, especially in a challenging economy,” said Peacock. “We are pleased with our U.S. beer sales, we will continue to invest in growing our brands and we will always look for ways to become more efficient. Decisions like this are never easy, but they will ensure the long-term success for
Anheuser-Busch and our employees.”
The company anticipates that the aggregate pre-tax expense associated with the reduction will be approximately 197 million USD. Approximately 150 million USD of this expense will arise from severance arrangements with terminated employees and the remainder will arise from enhancements in the pension benefits required by the terms of the defined benefit plan because the terminations are occurring within three years of the change of control of the company. The company anticipates that cash expenditures from the reduction will be approximately 213 million USD. The plans announced today are an integral part of the at least 1.5 billion USD in annual synergies identified by InBev when it announced its combination with Anheuser-Busch in July. The company is confident in its ability to achieve against this synergies projection by 2011.
No surprises there, but with a mere 17 days until Christmas, it certainly feels like scrooge has arrived a little early this year.