Corp. HR/VL
NESTLE EUROPEAN COUNCIL FOR INFORMATION AND
CONSULTATION – PLENARY MEETING
CICG – Geneva / November 2008
______________________________________________________
Minutes
1. Opening and Welcome
L. Cantarell and W. Ending welcomed the participants and opened the meeting.
Welcome extended to L. Freixe – successor to L. Cantarell - as well as to J. Lopez
who will present Nestlé Continuous Excellence. J. Harris will be joining in the
afternoon to give an update on Nestlé Waters business.
L. Freixe introduced himself and provided some key messages, i.e. belief in the
value of the teams which are made up of people and the conviction that there are
opportunities even in difficult periods. He also mentioned that the future is not a given
nor a gift – it is a conquest. His role in Zone Europe will be to design the future with
the teams in the markets which he will keep close contact with as the business is
carried out in the markets and the clients are in the markets.
W. Endling thanked L. Freixe and looked forward to close co-operation.
2. Nestlé Continuous Excellence and Implications at Factory Level (J. Lopez)
J. Lopez thanked L. Cantarell and W. Endling for the opportunity offered to him to
present Nestlé Continuous Excellence (NCE) - an important initiative of the Group and briefly introduced himself.
Here are some highlights of his presentation (presentation provided) :
 NCE is a journey, a new mindset
 Nestlé is a key supplier of Nestlé and Nestlé is a key customer of Nestlé
 Focus on safety (not yet at satisfactory level), consumer complaints and cost
when visiting factories
 There should be less command and control and more empowerment
 There should be more alignment of all actions around the world avoiding waste
 Total Performance Management (TPM) will be a reality at Nestlé
 A lot of stress is perceived when visiting the factories
 Education and training are needed for the introduction of TPM and for
enhancing people empowerment
 There is less tension with TPM
 TPM is a sustainable attitude and inspired approach to continuous improvement
 The way to understand Nestlé Continuous Excellence is to engage everyone's
heart and mind to a consumer-driven war on waste
 The target is: 1 team, 100% engagement, 0 waste
 TPM will make Nestlé a better place to work
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Questions and Answers
W. Endling thanked J. Lopez for his presentation. He mentioned that a positive
aspect of NCE is the involvement of employees and their contribution in terms of
knowledge and hands-on experience and inquired about the training which will be
provided to staff wondering if the company will be looking at whether staff has the
skills for TPM and NCE and how to train them further, or whether the company will
seek already skilled people from the market. He also asked about the company's
intentions in terms of continuous training and inquired about responsibility in case of
accidents and/or mistakes, against the background of the focus on teamwork in TPM.
J. Lopez mentioned how important it is to learn from one another and to avoid
mistakes. TPM is a sustainable attitude and inspired approach to continuous
improvement. Training will always be part of NCE. Training for the operators will be
needed. It is important to help people enhance their capabilities, help them
understand how to improve and enhance productivity. Responsibility lies at all levels
- not only at the operators' level but also at management level in the Company.
W. Endling acknowledged that it is a must to have less waste and more improved
quality and productivity and, in this context, noted that NCE was a cost-cutting and
productivity-enhancing exercise which, by definition, could lead to job reductions. He
questioned the logic behind encouraging and rewarding suggestions in the context of
"continuous improvement", which would eventually lead to a reduction in jobs.
J. Lopez mentioned that very often upon introduction of TPM on one line, other lines
immediately are keen to follow in introducing TPM. This is a progressive process.
Regarding rewards, the concept is very much linked to a changing work place and to
making the Nestlé operations a better place to work, contributing to total performance
by improving operations.
J.P. Ribout – (France) mentioned that it is important to count on a tool which will
eliminate problems and degradation in work. In order that people are comfortable in
their work place, they should be assured of their job security and not be afraid of
losing their jobs. We need to be careful that we don't push to extremes, trying to get
things done quicker and quicker and exposing ourselves to accidents (working
conditions, schedules, stress, etc.). To be comfortable at the work place, workers
should be provided with development perspectives and with adequate purchasing
power. He also made a reference to the consequence of GLOBE implementation.
J. Lopez referred to the investments in upgrading installations and not only for those
done in new factories. He also mentioned that regarding GLOBE, the situation is
monitored very closely with the objective to improve. There is overall more cooperation needed with social partners, members of management as well as all with
the Nestlé employees.
E. Péry – (France) concurred with the emphasis put on safety. He also mentioned
that should productivity be improved, it should not be to the disadvantage of the
working conditions. Remuneration conditions should also be linked to the
enhancement of the activities.
J. Lopez ensured that any improvement made is not made to the disadvantage of
any other factor. Regarding job classifications, the capabilities of the operators
towards any improvement should be recognised. Operators are awarded for the
added value that they can bring in the working environment.
J. Feter – (Poland) referred to the number of the temporary workers and to how they
will be involved in the implementation of the programmes.
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J. Lopez mentioned that NCE is a process based on one model and that TMP is one
of its elements. It is clear that temporary workers have to be included in the process
in order to manage the operations according to the NCE model. Nobody is excluded.
J. Mesquita (Portugal) mentioned that there is a need to diagnose certain problems
in order to work towards more efficiency. It has sometimes been noticed that
operators do not know what they should do and that there are mistakes when
operating machinery. He put the emphasis on working conditions, on the working
environment and on adequate equipment.
J. Lopez mentioned the importance to have the right machinery, running as
appropriate, removing waste and ensuring production as expected – protecting
workers and improving their environment and their conditions. TPM put the emphasis
on the reliability of the machinery. There is also a commitment from the company to
ensure that the number of accidents is reduced. He mentioned being alerted to
accidents and their circumstances. There is the objective of "0" accident and "0"
complaints and everybody should work towards this direction.
C. Montllor (Spain) raised his concern about the contradictions felt as, on one hand
there is the resolve to improve efficiency in the factory and, on the other hand, there
is the resolve to reduce cost. Maintenance is crucial to doing a good job in the best
conditions but it has a cost, and there is pressure to reduce this cost.
J. Lopez stressed the fact that the company is not just trying to reduce costs, the aim
is to eliminate waste.
K. Hoffmann (Germany) mentioned the situation in the factory in Hamburg where a
consultancy company has been mandated and is looking particularly at how to cut
costs – other aspects being often neglected.
J. Lopez mentioned that the operations have to continuously deliver value to the
other parts of the company to ensure competitiveness.
W. Endling thanked J. Lopez and underlined that he understood that this should not
be seen as a cost- saving programme but rather a programme ensuring that workers
are better trained and receive continuous training. He asked for feedback on the
evolution of the programme to the next NECIC meetings if and as appropriate.
L. Cantarell thanked the representatives for their active participation ensuring that
their concerns and comments will be taken into account. He mentioned that
continuous improvement is also looked at in other parts of the organisation
(administration, Globe, etc.) and not only in operations.
3. Business Results (L. Cantarell)
3.1. 2008 First 9 Months Results - Group
L. Cantarell presented the highlights of the results of the Group for the first 9 months
of the year. The Nestlé model is built on 5% to 6% Organic Growth. Target is easier
to be achieved in an inflationary period. There are good results overall for the Group
and Food & Beverages – compared to our competitors. There is volatility in terms of
consumption in Europe and a slow down. He mentioned that the financial position of
the company and the way it is managed is under control. 8% OG and the Nestlé
model should be delivered in 2008.
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3.2. 2008 First 9 Months Results - Europe
Overall OG in Europe 2,1% - basically good result in GB region and in Petcare,
accelerated growth in Germany. Situation in Russia slightly deteriorating. Ukrainian
market has proved difficult and volatile. Good evolution also shown in market shares.
Overall sustained and challenging evolution over the past few years in Europe where
we could be proud of getting growth back. C&EE which was a small piece in the past
is now getting bigger and helps in balancing the results.
3.3. Ice Cream
Ice Cream is a strategic category for the Group and in Europe. Figures are not as
they should be. The Company constantly looks at re-evaluating the business, its
structures, products and portfolio and wants to remain in the business, taking
therefore the adequate measures. There is still a need for strong brands retail
products. Sales and margins decreased and volume is an issue. Costs have to be
well managed in this category (factories and distribution model).
Mövenpick of Switzerland: There is an ambition to create a platform to drive the
development of this category. There will not be economical results in the coming
years considering the investments, the creation of the teams and of the sales teams
in the markets to push the brand. The quality of product is outstanding, has the right
packaging and the right approach. Super Premium has a good success story.
3.4. Outlook 2008
The macro figures look challenging, there is continuous volatility, consumer
confidence is unstable, and there is pressure on the business in Ukraine, Hungary,
Russia, and Romania. However in the markets, opportunities remain despite the
pressure.
The key to success in 2009 will be to continue and maintain the company's strategy
– emphasis put on operational efficiency, innovation / renovation, product availability,
appealing and attractive communication – with a need to set priorities, be fast and
quick.
PPP (Popularly Price Products) is a priority for Nestlé in Europe. There have been
good success stories so far in Russia and even in France (products launched with
Herta and Maggi brands).
The key focus areas in 2009 will be:
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Nutrition Health and Wellness
Portfolio Management
Market Shares
Customer Management
War on Waste
Response from the co-chairman
W. Endling thanked L. Cantarell for the business update and made the following
comments:
Financial crises and economic crises – money lost in the world. Example of the
car industry in the US where the major car companies are going bankrupt. 2009 will
be a difficult year. Consumers have not received pay increases. Purchasing power is
decreasing. Nestlé can show good results in 2008 also thanks to the price increases
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in the markets. Now, however, there is pressure to cut prices, commodity prices are
falling. He wondered what will be the consequences of the decreasing consumption,
of the pressure on prices on the business in 2009. He also considered the fact that
the medium price segment is shrinking and that the discounters are further
developing. He raised his concern on the fact that consumers will be more and more
inclined to buy from discounters and be less and less loyal to Nestlé products.
Waters: Nestlé is at the centre of attention in this category with criticism raised in the
area of bottled waters. Water is a basic commodity and there are people who still do
not have access to water consumption on a daily basis. How will the image be
preserved for Nestlé?
Ice cream: a few questions raised in this category, i.e. how will it be possible to get
bigger margins in 2-3 years, what will have to be invested, will there be bigger lines,
how long can we continue investing without making a profit, two factories have
recently been closed, one in Romania and one in Denmark, advantage seen in
production involving a co-packer, other companies have more capacity for production
than Nestlé, any possibility examined to provide for the necessary capacity in a
Nestlé factory?
Regarding the Esbjerg factory closure, an ad-hoc meeting was held within a week
with information and an exchange of views. An information and consultation meeting
bringing both parties should be held, however, before any decision is taken.
Unfortunately, ahead of the ad hoc meeting the social plan had been agreed to. It
was not possible to influence the measures which were being implemented. Although
the social plan was agreed, some criticism was raised because employee were
receiving their settlement but were requested to remain to ensure the continuation of
production until the end of December. This was considered as not fair for the
employees who had to devote time to look for new jobs.
Change in Management: L. Olofsson's resignation after 32 years in the Nestlé
Group was surprising. He inquired whether there existed any clause in the contracts
regarding the move to a competitor (P. Polman's case) and the way the situation of L.
Olofsson will be managed, bearing in mind that he will now be negotiating conditions
between Nestlé and Carrefour.
Payroll and accounting processes transferred to Poland: He mentioned that the
situation was complex, the collective agreements are different from country to
country, the pay slips are frequently inaccurate, and there is mismanagement.
Important to take the necessary action to improve and eliminate errors.
Code of Business Conduct: There have been problems with the distribution of this
document as there are potential conflicts with national legislation. There are cases
where the code has been used to take measures against workers, whereas workers
have behaved according to national legislation! Cases rose in Poland and in Spain.
This situation has to be considered with the managers in Human Resources in the
different countries.
Regarding the Financial crisis, L. Cantarell recalled the long term perspective of
Nestlé. It is difficult to anticipate the consequences of the evolution of raw material
prices. It seems however that the second half of 2009 may well be more encouraging.
It is important to keep consumption at the right level and keep this in mind when
considering pricing, promotions, and support to our brands in volatile and difficult
situations. Indeed the mainstream business is shrinking and Premium and PPP
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developing. Nestlé is one of the best in dealing with Lidl and has good success story
with another discounter company in Spain and France.
Regarding the Product Categories, J. Harris will present and comment the business
situation in Nestlé Waters.
Regarding Ice Cream, this category is indeed strategic. It has been decided to invest
in a Super Premium strategy (Mövenpick, Gelateria del Corso) and the company is
working towards fine-tuning the organisation. This is not THE solution for the
business but it is one of the elements of the solution. There is a need to take
measures in some factories. The company believes in the future of this category.
Referring to the factory in Bucharest, L. Cantarell mentioned that its closure was
necessary in order to optimise the business.
The company invested in Esbjerg where the business was not a standard business
for Nestlé and also a difficult business. No viable solution was found internally for
more that 3 years. The solution has finally been found with a co-packer – and this
seemed to be the only solution. The employees were the first to be informed. The
NECIC co-chairman was subsequently informed. The social plan was then accepted.
Indeed employees have been asked to remain until Dec. 5th in order to save the
situation of the business for the future. The employees accepted the situation and do
not react negatively.
Regarding L. Olofsson, L. Cantarell mentioned that he did receive an attractive offer
to be CEO of the second biggest retail company in the world. He also mentioned that
if anybody wants to leave, then it is his/her own choice to leave. He also mentioned
that the Company does not have anything to hide in the way customers are managed
within the Group.
Payroll: A. Silva took the opportunity to provide some information regarding the
payroll situation now live in most of the markets in Europe (live in Switzerland, UK,
France, Italy and Iberia - Germany in progress). There are some problems in France
which are monitored on a daily basis but which are rather related to the service
provider. Some problems also in Italy for similar reasons. The other markets
encounter some minor problems.
Code of Business conduct: L. Cantarell reminded that the document "Code of
Business Conduct" is not a legal document. This is a guideline complementing the
document "Nestlé Business Principles". If the document is in conflict with local
legislation, then local legislation will prevail.
The cases that we referred in Poland and in Spain are rather linked with disciplinary
measures that have to be taken and are not linked to the observance of the Code of
Business Conduct.
O. Colonna (Italy) thanked for the information provided and, focusing on ice cream,
asked where the ice cream products are manufactured in Europe, noticing low
volumes in the Italian and Spanish factories. He asked if there is any harmonisation
project in this area with a possibility of production shifts from factory to factory and
accordingly asked for information in due course at the NECIC level and in the
respective countries.
L. Cantarell assured that any such decision having transnational impact on
production will be informed as per usual process. He also mentioned that there is
indeed a restructuring project in Parma in Italy as there is a need to specialise the
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factory and better manage the business and improve competitiveness, costs and
commercial positioning. A presentation regarding the Ice Cream category will be
made during the next plenary meeting and questions will be taken then.
C. Alunni (Italy) inquired about the strategy in the Italian market – through new
acquisitions, through divestments? He mentioned that the situation with Lidl in Italy is
worrying – they cancelled a contract, affecting 20% of the Christmas campaign.
Regarding the situation in payroll, he thanked for the information provided which will
be reported back at the local level.
L. Cantarell mentioned that there is no strategy for divestment in Italy. There were
some issues in the Sansepolcro factory (on the way to be resolved), the
confectionery business is well managed, ice cream is constantly analysed with
development and revitalisation in the Gelateria del Corso brand. In the Buitoni
business – which is globally worrying – the responsibility for the chilled and frozen
sectors has been given to one person. There are good plans for innovation and
renovation in the frozen part. Nescafé business is ok and Nesquick is a good
success story.
Regarding Nescafé Dolce Gusto, the machines are selling slowly but coffee
consumption is high. Worth mentioning that Italy is a turbulent market, that the
business is tough with unstable trade. The company reshuffled. There is on the other
hand a good business in Nutrition. There is a commitment to closely monitor and
solve the problems regarding payroll.
J. Feter (Poland) mentioned that there were 2 cases of workers who were fired,
particularly referring to Mr. Kotula who was the head of the works council in Gerber in
Poland and who was let go although the trade union was not in agreement with that.
He also mentioned that he could not agree with the company's declaration regarding
the reasons of this departure.
L. Cantarell mentioned that the Company is complying with the law and that the
Company is not keen to fire whoever is defending the interests of the employees. He
also mentioned that the person in question had acted against the interests of the
Company and that this is now being dealt with in court.
J. Mesquita (Portugal) mentioned that the Code of Business Conduct deals with
confidential information. He raised the concern that Nestlé has drawn up this
document without involving the workers – this is not a good example of social
corporate responsibility from Nestlé. He strongly expressed the feeling that this is a
document to be jointly drawn up with the workers and the workers representatives.
L. Cantarell re-emphasised the fact that the document is a complement to the
document "Nestlé Corporate Business Principles", that this is not a legally biding
exercise. If the document is against the law, then it cannot be implemented.
C. Torre (Spain) raised a concern regarding the ice cream business on which a more
thorough presentation will be provided in the next session. It is however important to
express the concern in Spain regarding Guadalajara production site and regarding
the future of the workers in that business in Spain. She mentioned we should look at
the different distribution models in Europe and, should there be restructuring, we
should deal with this at European level. She also expressed the concern shared by
all delegates at this meeting about measures taken against work council
representatives and some irregular practices in this respect in some countries.
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L. Cantarell did not have anything to add regarding the issue in Malaga which was
referred to. The Company is not aiming at threatening anyone carrying out their
duties. Regarding actions taken towards employees, this is no doubt the right of the
company to take such action is certain circumstances - regardless if the person is a
workers' representative or not. Regarding the Ice Cream business, L. Cantarell takes
note of the comments and mentioned that the Company is working towards finding a
good solution for the utilisation of the Spanish factories.
S. Fershl (Germany) mentioned concerns regarding the implementation of the Nestlé
Code of Business Conduct in Germany. She pointed out that the text refers to
disciplinary action in the event of failure to comply with the Code. She further pointed
out that trade union representatives run the risk of acting in contradiction with
Nestlé's interests (or may appear to Nestlé to be doing so) by virtue of their role and
the information they have.
L. Cantarell mentioned that although understanding the concerns – they need to be
put into perspective and again emphasised on the fact that this is not a legal
document but that it is a document expressing the way we do work in Nestlé.
R. Whitehead (UK) mentioned that people would expect special attention to
mistakes in pay slips which are even below 200GBP.
L Cantarell ensured that the situation will be analysed.
4. Nestlé Waters Business – A strategic Business for the Group (J. Harris)
J. Harris made a presentation of the situation in the Water business world-wide and
in Europe (presentation provided).
In conclusion, he mentioned that we need to go back to the Nestlé Model regarding
the evolution of the business, stabilise the business, communicate health benefits of
Nestlé Waters products and continue focusing on sustainability.
Questions and Answers
W. Endling asked about the advertising strategy and the time frame foreseen for
generating growth in the water business.
J. Harris: The business is looking towards a growth of 3 to 4% and therefore there is
a need to look at communication but also to be more aggressive on promotions.
From a global perspective, most of the growth will happen outside Europe where the
business is declining.
A. Telò (Italy) mentioned that Nestlé brands have been under attack from ecologists,
private label, tap water, pointing out that the answer was not in changing the shape
of the bottle, making it more attractive and hoping it will sell. He raised questions
about the management in place in Italy, and on the reasons the company lost market
share, on the situation of the environment-friendly bottles and on the studies
regarding the economic values of this.
J. Harris mentioned that the management in place was a new management. Market
shares have been slightly lost against low-price water and bio-degradable bottles.
The plan is to go back and reinforcing Vera and Levissima. Focus on our brands,
quality and trying to build up our business.
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B. Geppert (Germany) mentioned that the situation in Germany is difficult and that
various measures were taken in the past when 3 out of 5 springs were sold and
distribution channels were re-organised. There are concerns about the future, mainly:
1. Are we going to keep the remaining springs?
2. Discussion about the abandonment of Perrier
3. Is it possible that we will become merely a distribution company?
J. Harris mentioned that the Group is committed to the factories in Germany
although this is an unprofitable business. The intention is to remain in the business in
Germany with the existing brands and to add the Pure Life brand, encouraging Vittel
and Perrier which are core for Nestlé. Germany will continue to be a challenging
business place.
J. Mesquita (Portugal) referred to human rights in the water business and asked
about the guiding principles in exploiting water resources – it is indeed crucial that
local populations are involved in the company's activities. He expressed his
disappointment regarding the fact that the closure of a water plant and the opening of
a new one in the proximity were not reported at the previous European Works
Council meeting and were announced in the market right after that meeting. He
questioned on the job safety in that factory.
J. Harris mentioned that everybody should have access to clean water and that the
company is committed to that. The company's principle is to establish a water factory
only if there is a long term sustainable water resources that renews itself naturally
over time. The Portuguese situation reported is a local matter, a recent decision
having been taken to invest in a new factory. Jobs will be as much as possible
protected. There are exchanges with local unions and there is no problem or
dissatisfaction for the workers in the factory.
L. Cantarell added that this last point was taken up and clarified during the recent
Steering Committee Meeting.
S. Sastre (France) mentioned that there is an overall concern for the workers in
France regarding their job safety due to the various ongoing projects, the efforts in
MOGEs reduction, the positioning of water compared to other soft drinks, etc.
J. Harris mentioned that indeed the situation is challenging in France, particularly at
the Vittel site where there is a serious problem of growth. The decline in Contrex and
Vittel was double digit over the last 12 months and also before. There is a need to
restructure, provide the necessary support and work together to figure out how the
business can go on and to find suitable solutions. The introduction of drinks over the
past years has failed. This is taken up over the next months.
E. Péry (France) questioned on how the company sees the American market.
J. Harris mentioned that the US business is by far the most profitable business –
double the size and double the profit of the one in Europe despite the difficult
economic situation. He also mentioned that efforts will be deployed to build up the
business in Europe, to turnaround the Vittel activities and to get the Perrier business
back on track. There is a need to start the process of getting the business on track in
the whole organisation.
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W. Endling asked about the future of various springs, particularly those serving a
regional brand, in Germany for example. Is there a plan to convert them to Pure Life
or to Aquarel?
J. Harris mentioned it is up to the local marketing groups to manage the local brands
which will continue to exist. Will try to have a Nestlé Pure Life and a Nestlé Aquarel.
5. Conclusions
W. Endling mentioned with satisfaction the interesting points discussed and the
possibility provided to raise the issues. Exchanges should continue particularly in the
area of waters which we will be analysing and following up closely. He mentioned his
conviction that in this challenging situation, the workers are on the business' side and
know what needs to be done and will be looking forward to participating in the
company's success in return for their efforts once the turnaround is achieved. The
implementation of Nestlé Continuous Excellence will demand more commitment and
responsibility from workers – this not being an exercise to eliminate jobs but to have
rather more skilled and better rewarded workers.
L. Cantarell thanked all the participants for their interaction. He referred to the fact
that when he took over the co-chair, he mentioned that he wished to have more
green than red on the business charts provided, to be open, clear and to listen to the
concerns and to the suggestions. This he believes has been achieved as a company
and together with the colleagues, in a transparent and respectful way. He thanked
once again Jose Lopez, John Harris and Human Resources for their important
contributions – this showing the interest, the commitment and the belief of the
company in the information and consultation process for this NECIC group –
information and consultation process starting however at local level. He also thanked
Mr. Endling for the co-operation extended. No doubt that L. Freixe, taking the cochair, will continue building up the good relationship established so far.
N.B.
The programme has been rescheduled in order to give more time to the questions
and answers session on the presentation on the Water Business. Consequently, the
item on temporary workers was postponed to the next plenary meeting; however
hard copies of the presentation were provided.