By Jaylan Boyle, Contributing Reporter
RIO DE JANEIRO – The merger of Brazilian food companies Sadia and Perdigao, still pending approval from government regulatory agencies, will result directly in the loss of 10,000 jobs, and indirectly in the loss of a further 30,000, according to the president of the National Confederation of Food and Allied Industries Workers (CNTA), Artur Bueno de Camargo.
The two companies process more than 2 billion chickens and other birds a year, and together would create one of the world’s largest frozen and processed food companies, ranking as the 10th largest food company in the Americas.
The merger could create more competition with US players that have set up shop in Brazil due to its comparative low wages and costs. Tyson Foods Inc., for example, bought 3 poultry companies in the country last September, paving the way for other food producers in a place that already exports the most chicken in the world.
The suggestion of a merger has gone from warm to hot in the current economic climate, after Sadia incurred losses of around US$400 million with the nose-dive of the Brazilian Real in the currency markets last year. This created negative growth for them in 2008, making the stock swap deal a sweeter and safer option for the company. As for Perdigao, it would mean taking over its main retail competitor.
If approved, the merger will create the new entity Brasillian Foods, with a combined annual revenue of US$10.6 billion. The impact of this union was discussed this week in Curitiba (PR) at a meeting attended by 80 of the nation’s union leaders from 8 states.
“We reached the conclusion that, where there are two refrigeration plants used by the companies in close proximity to one other, one will be closed. In addition, where there are two logistical systems used by the companies in nearby regions, one will close it’s doors. By our calculations, this represents the loss of 10,000 direct jobs and 30,000 indirect jobs” said Mr Camargo. Sadia has disputed this analysis, while Perdigao has declined to comment.
According to Mr Camargo, the confederation has notified the Administrative Council for Economic Defense and the Public Ministry of Labour and Justice of its findings, after a thorough analysis was carried out. “We must create a body in the Government that concerns itself with the protection of workers, and strives to assess the social impact these mergers, acquisitions and transactions will have,” Mr. Camargo said.
Mr. Camargo has also expressed concern that smaller companies will not be able to compete against the two largest entities in the local industry, once they combine forces, and that this declining viability will result in even further unemployment in the sector, which employs 320,000 Brazilians. 120,000 of these workers, or more than 30% of the industry’s workforce, are currently employed by Sadia and Perdigao.