PepsiCo halts production at its Collierville, Tennessee, bottling plant amid long US slump in cola sales; about 60 workers idled

Nevin Barich

MEMPHIS, Tennessee , March 14, 2014 (Commercial Appeal) – PepsiCo Inc. shut down production at its Collierville bottling plant Thursday, idling about 60 workers as the soft drink giant grapples with a long national slump in cola sales.

The employees were sent home after they arrived for work Thursday morning at the plant at 150 S. Byhalia Road, said Terry Lovan, president and business manager of the International Brotherhood of Teamsters Local 984.

About 100 employees on the distribution and sales side of the facility aren't affected.

PepsiCo's closure follows the shutdown of facilities announced this year at Abilene, Texas; Dayton, Ohio; Roanoke, Va; and Salem, Ore.

Despite the national contraction, Lovan said the shutdown came out of the blue.

"The people reported to work this morning. They told them they were closing the production side," Lovan said. "That's the American way any more. Wake up in the morning and you're liable to not have a job."

Lovan said he received a formal notification later Thursday and scheduled a meeting with the company Friday to find out details.

Collierville city officials received a letter from Pepsi saying the layoffs include 12 salaried workers and 43 hourly workers. Mayor Stan Joyner said the letter indicated the closure was due to increased cost pressures and excess capacity.

"We hate to see them go," Joyner said. "They've been a great corporate citizen for the years that they've been here."

Pepsi spokeswoman Gina Anderson said, "We plan to close down production operations at our Collierville beverage facility effective immediately. Associated work will move to other facilities within our system. This difficult decision was made with careful consideration and we're committed to providing support to affected employees by offering outplacement services. A majority of employees will remain at the Collierville facility."

It's unclear where products sold in Greater Memphis would be made.

Lovan said the layoff notice identified machine operators, electricians and mechanics. He said truck drivers will also be affected.

Hourly wages are between $15 and $25, he said. The union's contract was effective in October 2011 and runs through 2016, Lovan said.

Shelby County assessor records indicate the manufacturing facility dates to 1970 and the distribution facility to 1977.

"Sales are down nationwide," Lovan said. "They've closed another plant or two, small ones. This plant's been there for umpteen years and evidently they've decided not to invest any money in it to bring it up to modern standards."

It's a loss of manufacturing jobs at a time when union workers at the Memphis Kellogg cereal plant have been locked out since last October following a breakdown in contract negotiations.

The closing comes as Pepsi, Coca-Cola and other soft drink makers have struggled for nearly eight years to maintain sales volumes of carbonated beverages. In a nation where children and young adults often favor water, fruit, energy and coffee drinks, the typical Coca-Cola consumer is 56 years year old, prompting Coca-Cola in February to buy 10 percent of Green Mountain Coffee Roasters.

As sales in PepsiCo's North American soft drink business fell 2 percent last year, investor Nelson Peltz pressed the New York company to sell the nonbeverage business and hold on to its Frito-Lay snack food unit. PepsiCo CEO chief executive Indra Nooyi rebuffed the investor and went ahead with plans to sell drinks sweetened with Sweetmyx.

Staff writer Lela Garlington of The Commercial Appeal contributed to this story.

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