Indofood to lay off more workers

Indofood to lay off more workers

The Jakarta Post, Jakarta

Aiming to boost efficiency, the world's largest instant noodle
maker, PT Indofood Sukses Makmur, has dismissed thousands of
workers and plans to keep on doing so until at least 3,500
workers have been laid off by the end of the year.

"As of September, we had laid off 2,900 workers who were
mostly nearing retirement age. It is mainly for efficiency
reasons," Indofood vice president director Franciscus Welirang
said during a company briefing on Wednesday.

The company had around 50,000 workers at the beginning of 2005
and planned to downsize this figure to between 46,000 and 46,500
by the end of the year.

The company has allocated Rp 130 billion (some US$13 million)
in severance pay and is hoping that this will save the company
between Rp 80 billion and Rp 100 billion per annum in the years
to come.

It said that it would automate the packaging process, and also
operate three shifts a day to optimize the utilization of the
company's production capacity.

Despite the massive layoffs, Franciscus said that the company
was also recruiting new employees for its oil palm plantations
and newly acquired shipping firm.

Earlier this year, Indofood bought convertible bonds issued by
shipping firm PT Pelayaran Tahta Bahtera.

An Indofood director, Cesar M. dela Cruz, said the company
would expand its current 97,000 hectares of oil palm plantations
to up to 300,000 hectares over the next 10 years.

"But, it is also possible that we might do it within a year,"
he added, without elaborating.

Its current plantations supply 315,000 tons of crude palm oil
(CPO) per annum, or around 50 percent of the company's demand for
vegetable oil.

In the first nine months of the year, Indofood's net profit
dropped to Rp 42.2 billion from Rp 288.6 billion as of September
last year.

"This was due to one-time charges and loans amounting to Rp
217.3 billion," Franciscus said, adding that losses arising from
the sale of foreign exchange hedging contracts also contributed
to the drop.

Indofood has targeted an increase in its market share for
consumer products -- mainly instant noodles -- to up to 75
percent by the end of this year from slightly over 70 percent
currently.

"Market share is expected to reach 78 percent next year," dela
Cruz added.