Cutting jobs is InBev’s business
The Belgian-Brazilian beer giant InBev borrowed $45 billion to acquire Anheuser-Busch and the King of Beers, and it is wasting no time starting to work on its payback.
The St. Louis community had been holding its collective breath ever since the buyout closed. Given the large financial premium built into InBev’s $70-per-A-B-share purchase price, the only conceivable way the merged company can pay off its massive debt is to cut costs — mainly people — while revenue still is good.
Cost-cutting has been InBev’s business model, and the ruthlessness with which it wields that ax has become all too plain. On Monday — less than three weeks before Christmas — the company announced that 1,400 salaried A-B workers are being fired. About 1,000 of those jobs are at the brewery’s St. Louis headquarters on Pestalozzi Street, and Post-Dispatch reporters found the mood sober there after the announcement.
In this, the brewery is no different from other workplaces across the nation, including many here in the St. Louis region, at which tens of thousands of workers are being pink-slipped as the tired national economy slows and stalls.
There is one significant exception: The A-B/InBev merger was not a defensive business move to stay ahead of tough economic times. Beer sales have been going gangbusters.
Rather, the A-B acquisition — although it began as an unwanted approach from InBev — became a deal of choice, a market play in which job cuts become the main vehicle to squeeze more out of an already-profitable business.
The A-B board chose to make the Busch family and stockholders a great deal of money.
“St. Louis has a broad-based, diversified economy with 1,350,000 jobs,” the Regional Chamber and Growth Association observed in its newsletter this week. “In time, our region will be able to absorb the talents and skills of these 1,000 people,” it predicts.
Let’s hope so, and the sooner the better.
the employees voted for this… GREED!!! this is what they asked for! hope the money they made off their stocks and that which they receive in their severence packages (if InBev doesn’t decrease the severence packages) is enough to pay the bills until they find another DECENT job. (which is proving to be increasingly difficult in this economy) change isn’t always a bad thing, but GREED will eventually come back around to bite you in the butt & i imagine after the holidays, sitting down, won’t be feeling so good!
merry christmas!
125me, I rarely call people names in these blogs but almost did here. Instead, I’ve decided that calling people names is the sign of an uneducated person…which I am not.
The employees did not vote for the purchase and you really should do your homework before spouting off about this topic. The majority stockholders were not employees.
It’s ironic that InBev is letting so many people go with as successful as AB has been and currently is. Brito and his henchmen truly believe they can run the company better than the Busch family has by letting go top managers. There have been reports that the firings (lets call it what it is) are overlapping positions. This is FALSE. They are letting go higher paid managers now, figuring the lower paid employees will pick up the slack.
Only idiots mess with a successful business plan….and Brito and his henchmen are idiots. There will be more layoffs this week and next for this first round. Once the economy turns around, there will be a mass exodus of many more managers and front line employees, as InBev will slash pensions, pay raises (which have been put on hold for 2009) and benefits.
Why work for ABI? The success of the company has been due to a belief by teh employees that Anheuser-Busch really was the best company in the world to work for. There absolutely was a air of arrogance among the employees but they worked long hard hours. They wore the AB logo with pride and bought beers for non-AB drinkers with the knowledge that their beer was the best beer in the world.
The pride is quickly evaporating and Brito and his henchmen are doing to the company what was considered unfathomable a year ago…stripping it of its soul.
I would agree that this is “business” but it’s BAD business.
Didn’t AB have the “Blue Ocean” proposal developed before InBev bought them out. I think AB all along wanted/knew they needed to get rid of some dead weight.
Gosh, I thought I was reading about Lee Enterprises this morning until I read the header. Didn’t Lee pay the Pulitzer family gobs money along with the top dogs at the PD and then turn around and fire tons of people to help pay for the purchase? Just wondering? I hope the InBev people don’t run the brewery into the ground the way Lee has let the PD run itself into the ground my rudely disenfranchising a large segment of the StL population.
AJ, good question. Yes, AB was implementing Blue Ocean but the cuts were not going to be as deep nor of those that were important to the company. InBev is cutting far deeper and faster than the Blue Ocean iniative was going to do. Also, at least with Blue Ocean, you knew that the company was still going to be a strong company, dedicated to great quality, the City of St. Louis, and it’s strong work force.
ABI does not consider it’s workforce as important except for the top 250 people in the company…as told by Brito himself. ABI will be run like a european company..and will have limited success. Remember, they believe there are no best practices have learned from Anheuser Busch…as told by Brito himself.