The Atlanta Journal-Constitution, September 26, 2010, Sunday

Copyright 2010 The Atlanta Journal-Constitution

The Atlanta Journal-Constitution

September 26, 2010, Sunday

Coke merger worries workers

No word on how many jobs will be eliminated; Company expects to save $280 million in deal with major bottler.

BYLINE: Jeremiah McWilliams; Staff

It's a hot topic at Coca-Cola and its biggest bottler these days. When the dust settles, who will have a job, and where?

As Coca-Cola Co. plans to merge its North American business with that of bottler Coca-Cola Enterprises this year, talk of coming shake-ups --- either jobs moving or being eliminated --- has floated around the Coke tower on North Avenue and bottling plants in the Atlanta suburbs.

Coca-Cola has said the deal will generate annual cost savings of about $280 million over four years, concentrated in manufacturing, information technology and infrastructure including real estate. The company has not said how much of those savings will be in the form of job cuts.

The deal awaits only approval by CCE shareholders --- expected to be granted at a special meeting Friday --- and an OK from the Federal Trade Commission and Canadian regulators.

Tom Pirko, president of California consulting firm Bevmark, said he does not believe Coca-Cola executives have decided how many jobs will be eliminated. But "if you take those two words --- streamline and cut costs --- that means fire employees," he said.

"Everybody is really up in the air," said Nelson Calderon, an eight-year employee of Coca-Cola Enterprises. "No-body feels safe over there. The company has not sat down with us to explain how things are going to come down. That creates anxiety. Everybody is walking around not knowing what to expect."

CCE's footprint in Atlanta will change when the deal is done. The company employs about 1,400 people at its headquarters. After the deal, it says it will employ about 140 there, with the rest transferring to Coca-Cola Co., Co-ca-Cola North America or Coca-Cola Refreshments USA, Coca-Cola's name for its wholly-owned bottling operations.

CCE employs 59,000 people in North America and about 3,800 in metro Atlanta.

"You can assume over time that our presence in the United States, in terms of employees, will go down a bit," CCE chief executive John Brock told analysts in June.

UBS analyst Kaumil Gajrawala said the strategy behind the deal has more to do with capturing the growth of North America than with cutting costs. Coke has said that gaining control of North American bottling will give it more flexibility and efficiency in distributing its drinks.

Gajrawala predicted that only a small percentage of the cost savings will come from job cuts.

A variety of changes will start unfolding when the CCE deal closes, said John Sicher, editor and publisher of trade journal Beverage Digest. For example, Coke will form seven regional sales units in the U.S., combining Coke's and CCE's current regional units. It will also create new national sales teams.

"Coke wants its customers to have an easier time dealing with Coke than in the past and fewer people at Coke to deal with," Sicher said. In addition, the product supply operations of
Coca-Cola and CCE will be merged into one organization.

Coca-Cola, which has about 4,000 employees at its Atlanta headquarters, has given few public details of how its work force might change after the deal. It wants to remake its distribution system to clean up a tangled network that involves different plants for soft drinks and juice, as well as different sales forces and customer service personnel.

Morale on North Avenue is "hide-under-your-desk bad," said one former Coca-Cola communications executive who keeps in touch with several colleagues still at Coke. Another former executive who still does business with Coke said morale is poor, but perhaps not as low as in 2000. After thousands of layoffs were announced that year, a Mon-ster.com blimp circled the Coke building.

Coca-Cola spokesman Kenth Kaerhoeg acknowledged that employees have reacted with varying degrees of con-cern. But he said the general consensus is that the deal in Coke's flagship market will make the company a better place to work.

Kaerhoeg said Coca-Cola's targets for savings will involve job cuts, but new openings will also be created. Most people in the current North America teams at Coca-Cola and CCE will see "minimal change" in roles and responsibili-ties, he said.

"We expect minimal impact on associates during 2010," he said. "We have committed that all employees will know their role in the new organization as soon as possible" after the transaction closes.

"The best thing that we can do is ensure that we have direct and transparent communication with our people," Kaerhoeg said.

Coca-Cola's work force in the United States has expanded and contracted dramatically in the past decade.

In 2000, the company laid off about 5,200 people. About 1,750 of the cuts came in the U.S. Then, in 2003, Co-ca-Cola meshed the operations of three separate business units in North America: Coca-Cola North America, the Minute Maid Co. and the soda fountain business. The company dropped 1,700 jobs in the United States.

The company added 1,800 U.S. employees in 2006 primarily because of acquisitions and the consolidation of bot-tling operations. The company's domestic payroll hit a decade-high of 13,200 in late 2007.

Coca-Cola trimmed its U.S. work force by 1,500 jobs in 2008 and 2009. Coca-Cola has outsourced jobs in information technology for several years, and did the same with its security force in 2009. It is currently holding many positions open instead of hiring new employees, although it is not in an official hiring freeze.

The company's U.S. territory had about 11,700 employees at the end of 2009. The company did not provide a cur-rent headcount this month.

The Teamsters union is trying to organize 330 workers at CCE's plants in Marietta and College Park, and Co-ca-Cola's takeover of those bottling operations is a big part of the union's pitch.
"The prospect of arbitrary layoffs is real for these people," said Ben Speight, organizing director for Teamsters Lo-cal 728. "It's a potent threat."

About 18,000 of CCE's employees in North America are covered by collective bargaining agreements. They expire at various dates over the next four years, including 55 this year. When ownership changes hands, the new owner --- Coca-Cola, in this case --- is required to negotiate with the union about terms and conditions of employment, said Richard W. Hurd, professor of labor studies at Cornell University.

John Dickerson, who started working at CCE in 2004, said few workers expect Coca-Cola to shut production plants. The question, he said, is whether current workers will keep their jobs.
"Everybody's like, 'Wow, what's the next step?' " he said. "We want to make sure we've got a place in the company come October."

How we got the story

As Coca-Cola nears completion of its takeover of North American bottling operations, AJC reporter Jeremiah McWilliams looked into the effect on workers at both Coke and bottler Coca-Cola Enterprises. Both companies have a major presence in the Atlanta area, with thousands of employees. He talked to trade journalists, equity analysts, former employees and industry experts, as well as representatives of Coca-Cola and Coca-Cola Enterprises, to get a sense of what employees might expect in the coming months.

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