Seeking a job at a consumer products company like Clorox, General Mills, Colgate-Palmolive, Procter & Gamble or Coca-Cola? Good luck.
A report released today by the Grocery Manufacturers Association and consulting firm PricewaterhouseCoopers sheds light on why consumer products companies are holding back on hiring, despite sales growth. Chief among them: more productive workers and continued uncertainty about the direction of the economy.
Instead of expanding payrolls, consumer products companies are squeezing more Coca-Cola -- or bleach, or breakfast cereal -- from the proverbial turnip. Productivity, as measured by median sales per employee, increased for large, medium and small companies in 2010. That was a turnaround from the three-year period from 2007 to 2009, when the productivity of large manufacturers declined.
In the food sector, median sales per employee grew nearly 10 percent last year. It was the first time any sector in PricewaterhouseCoopers' analysis jumped above $400,000 of net sales per employee.
The deepest recession since World War II officially ended in June 2009. But personal consumption didn't recover to pre-recession levels until the third quarter of 2010. A limp job market, with unemployment around 9.6 percent for much of 2010, dampened Americans' enthusiasm to spend. That made consumer products companies reluctant to follow the old game plan of hiring workers to ratchet up production when emerging from a recession.
Dramatic run-ups in the cost of commodities such as oil also discourage hiring. The compliance costs of new legislation such as the Food Safety Modernization Act, arguably the most significant change in U.S. food law in over 70 years, and the possibility of higher taxes to attack huge state and federal deficits further cloud the outlook.
The economic recovery is "still pretty tepid," Dan Heinrich, chief financial officer of Clorox Co., told the authors of the report. "There are ups and downs, and still plenty of mixed signals."
Duane Still, chief financial officer Coca-Cola Refreshments, the company's sales, bottling and distribution unit in North America, echoed that sentiment. "We see positive signs and then something happens to slow everything down," he says in the report.
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