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PepsiCo to End Over 80 Years of Manufacturing at Detroit Facility Amid Restructuring

Prime Highlights 

  • PepsiCo has made the choice to close down production, transport, and maintenance operations in its Detroit facility.
  • Redundancy numbers are not revealed but warehouse, sale, and delivery business will continue to function.

Key Fact

  • PepsiCo’s Detroit factory has been operating for more than 80 years and employed around 400 people in 2020.

Key Background

PepsiCo said it would close the manufacturing operations of its legendary Detroit plant on Mack Avenue. The move marks the end to over eight decades of beverage manufacturing at the plant. The company said it would stop manufacture, transportation, and repair operations but that the warehouse, delivery, sales, and field services workers would continue to function out of there.

The notice was duly submitted to the State of Michigan via the Worker Adjustment and Retraining Notification (WARN) Act. No public announcement has been made by PepsiCo yet, however, as to how many employees will be affected via this shutdown. The location in Detroit employed approximately 400 people as of 2020, but nothing is specified about employee numbers now.

PepsiCo highlighted that it will provide for the involved employees by making available continuous compensation and benefits for a period in the interim. The company has ensured that customer service and product supply in the Detroit marketplace would not be impacted whatsoever by this shift in operations.

The plant shutdown is part of PepsiCo’s overall strategic repositioning to consolidate plants and react to shifting consumer demand. Over the last year, the company has shut comparable factories in cities like Cincinnati, Chicago, Atlanta, and Harrisburg. The actions come as PepsiCo’s beverage volumes slow, specifically in North America, where sales of traditional soft drinks continue to decrease.

As a reaction to evolving market conditions, PepsiCo is focusing its selling efforts on healthier offerings like low-calorie drinks and prebiotic soft drinks to tap the increasing health-conscious consumer base. The Detroit plant shutdown is a manifestation of the issue and strategic shift it will have to undertake to remain competitive in the new emerging beverage sector.

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