Uni-President to cut its workforce

Uni-President Enterprises Corp (統一企業), the nation's largest food processor, plans to eliminate up to 200 jobs as part of a cost-cutting strategy that will save about NT$600 million this year, a spokesman said yesterday.

"We aim to ax 3 percent of our workforce to reduce employee numbers from 5,200 to around 5,000 by the end of the year," said Simon Hung (洪士民), a Uni-President spokesman.

The plan encourages those who have worked at Uni-President for over 20 years to retire early.

Other cost-saving measures include tighter controls on inventory, upgrading operating efficiency and abandoning money-losing products, he said.

From a workforce of over 6,000, Uni-President started to cut jobs in 2000, eliminating about 5 percent of staff. Strengthening competition and slow sales growth triggered the move.

"The local food market has only limited room for growth ... to boost profits, Uni-President has to cut costs," said Nick Lai (賴以哲), a market analyst at Insight Pacific Investment Research (月涵證券).

Uni-President's sales last year grew 4.65 percent to NT$34.9 billion from NT$33.36 billion in 2001.

"The sales-growth rate is not impressive," said Yen Ming-chi (顏銘志), an analyst at KGI Securities Corp (中信證券).

The company's profit results were more impressive. In the first three quarters of last year, Uni-President generated NT$730 million in profits, a 15.9 percent or NT$100 million jump from the same period in 2001, Yen said. The company plans to release its annual financial report by April.

Uni-President shares rose NT$0.1 or 0.86 percent to close at NT$11.7 on the TAIEX yesterday.

Taiwan's entry into the WTO has created new competition for the food giant.

"Since Taiwan joined the WTO, an increasing number of foreign products were imported, adding to the already tough competition," Hung said.

In an effort to beat out other brands, the company has been forced to increase spending on marketing and advertising, he said.

Late last Uni-President planned to spend about NT$1.2 billion on marketing this year, or 3.4 percent of its estimated NT$35 billion in sales, Hung said

Increasing production in China may also help to cut costs, he said. Transferring the company's production to China and then gradually shutting down its production in Taiwan is a reasonable strategy, he said. When the government allows Chinese products to be imported to Taiwan, Uni-President may reduce local production, he said.

Uni-President operates 27 factories and employs 18,000 workers in China.