coca cola singapore shifts bottling to malaysia 1496912015

Coca-Cola participates in Singapore’s economic restructuring drive

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By :  ,  Financial Analyst

Coca-Cola Singapore Beverages is winding down its bottling operations in Singapore in support of Singapore’s economic restructuring drive. The unlisted company will shift manufacturing activities to neighbouring Malaysia, and in Singapore, will concentrate on high-tech, value-added services such as research and development, new technology and innovation.

The closure of the Singapore bottling operations will result in the retrenchment of around 200 employees. However, these workers will get ample support from the company, the Employment and Employability Institute, and the Food, Drinks and Allied Workers Union (FDAWU), according to the Singapore Business Review.

Employees have been assured of “competitive severance packages” and assistance for moving to new jobs. "When FDAWU was informed of Coca-Cola's plans, it quickly commenced discussions with CCSB to ensure fair compensation and treatment for the affected employees," said Tan Hock Soon, general secretary of FDAWU, according to Business Times. "CCSB was committed to this, and has been open to the union's requests and suggestions. The company has fulfilled the terms of retrenchment beyond industry norms."

Despite moving the bottling operations, Coca-Cola in Singapore will maintain a sizeable infrastructure such as a sales force, and various administrative functions such as warehousing, distribution, procurement, human resources, finance/administration, legal and IT.

Stephen Lusk, chief executive of Coca-Cola Singapore Beverages & Coca-Cola Bottlers Malaysia, said the company took these decisions “to better position itself to growth,” and to accordingly adjust its Singapore strategy.

Singapore’s 2015 budget aimed to refocus the economy through an economic restructuring that would increase innovation and accelerate internationalisation. Deputy Prime Minister (DPM) and Minister for Finance Tharman Shanmugaratnam said at the time: “Every form of innovation counts, and must be supported – whether it is a new process or brand, developing online marketing or leveraging on big data.”

Coca-Cola Singapore has committed to an investment of over US$100 million (SG$142 million) in Singapore, spread over the next five years. Kevin Lai, executive director of consumer businesses of the Singapore Economic Development Board, said he was confident that Singapore remained “a strategic business location for Coca-Cola,” and welcomed the company’s commitment to invest in high-value added activities such as the expansion of the state-of-the-art concentrate plant that supplied beverage concentrate to Asia Pacific markets.

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