700 Jobs Going At Coca Cola South Africa Is This An Indicator Of the Economy?
When global giants are restructuring in order to remain competitive you have to pay attention. This gives an indication of where the economy is and is the first time I have ever heard of Coca Cola cutting jobs in South Africa.
This week it was announced Coca Cola would be restructuring their businesses with regard to bottling plants. There has been quite a bit of deal making over the last 10 years with Coca Cola and the Coca Cola Global has decided to relinquish it's bottling plant shares for $2.6 billion. The Coca Cola HBC AG Nigerian company founded in 1951 now based in Switzerland is buying 75% of Coca Cola Beverages Africa giving them 14 African counties with more than 50% market share by volume. Coca Cola Global seems to be separating the business moving away from controlling the bottling process.
Coca Cola is not an obvious company that would be retrenching staff due to their market share dominance so one has to wonder how many other companies are heading down the same path. Reducing the costs is key to obtaining higher profits so every company should be doing this in the obvious areas.
Coca Cola HBC AG obviously see an opportunity here especially with savings on the work force where a reported 10% of the 7700 employees are cleaners in the bottling plants. This task can be fulfilled by AI as this is being used more and more and saw this cleaning technology being used in most international airports. 10% off the wage bill and this would only be the start as jobs will be replaced within the next 5 years.
I do think this is something we are going to see more and more of and this will be a trend with companies buying out others knowing where the savings can be found by lowering their running costs making sure the profits increase. The low skilled or no skilled jobs will be the first to go and then this trend will escalate to other jobs like administration. Many companies have a bloated work force after years of managers not knowing or understanding their jobs well enough to see this. Experienced people who have done the job can see this and so can the companies wide awake with AI.
When you think of manufacturing or bottling in this case the machines already do a majority of the work so one can see 75% of all jobs disappearing. In an bottling plant there would be very few skilled employees which would leave the majority to being replaced. There has been studies with the 70% AI rule where 70% of todays work will be run by AI and 30% by humans. I have seen bottling plants and would say this figure is going to be way higher and why I would suggest 75% would be a starting point. This would require a major investment, but running 24 hours the return on investment will be that much faster. A human workforce has many costs besides wages such as benefits, pensions and training so this would all be removed as a saving.
South Africa has a huge problem especially when you consider we are 34% officiary unemployed and more like 50% unemployed. The biggest issue is not the numbers but the skills the unemployed possess as they are very limited and cannot compete against AI. Very few can be trained due to their literacy levels with education not being a strong point in the country. These people have always done the unskilled work like cleaning and will be the first jobs to disappear.
The problem is the labor laws through the minimum wage has increased dramatically over the last 20 years so no labor is cheap anymore and they have kind of outpriced themselves. The worrying part is how many of the currently employed no skill workers are on the chopping block and would estimate at least half the current work force which would then send unemployment to over 70% which is a major crisis. They say that people can be trained in other jobs, but if you cannot read and write and do not have the basics then there is no hope.
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Am actually tempted to disagree with you but I'll give in since you have actual business experience.
Contrary to your views, and while I agree that companies will seek to optimize and maximize profits, I actually believe that it will be the high end jobs in greater danger - the ones that require a basic level of knowledge and information, but not so much by way of specialization. My reason is they bear more cost burden on the company.
That's just my take though. Time will tell
I think both high end and low meaning all jobs are at risk. I say low end right now as that technology is already in place and I think high end and middle management will take a little longer. This all depends on the costs involved to replace the work force because smaller companies will not necessarily have the funds to change as quickly as the bigger companies.
I also see manufacturing coming back to high priced labor markets with robotics enabled factories in developed world countries...
Good point and this is a serious positive when this happens.
Many take it for granted until it's too late and there's no choice left but to fold.
Yes they are signals we should be paying attention too.
Even a small school like ours is spending more than the revenues we collect from our educational services. We even struggle to pay for our utilities. How I wish that those at the top would take our financial status seriously.
Madness when people cannot stick to the budgets because we should all be making things work.