PepsiCo ‘Relentless’ Automation Shows Cost to Jobs

When most corporations automate their workforces, they tend to keep the news quiet. “One Thousand Jobs Lost to a Robot” makes for a bad headline from a PR standpoint, even if that sort of “efficiency” cheers investors and others who look at human beings as overhead costs.

Yet none of that reasoning has stopped PepsiCo from declaring it’s going to lay off a sizable (but as-yet-unknown) number of employees as part of a plan that involves “relentlessly automating and merging the best of our optimized business models” (in the words of CEO Ramon Laguarta).

This efficiency-minded reorganization will allow PepsiCo “to develop scale and sharpen core capabilities that drive even greater efficiency and effectiveness, creating a virtuous cycle,” Laguarta added. In the meantime, the company plans to pay out $2.5 billion in restructuring costs over the next four years, some 70 percent of it on employee severance.

Late last year, analyst firm Forrester predicted that automation could kill 10 percent of U.S. jobs in 2019, while creating the equivalent of 3 percent. Analytics, chatbots, and robotics may impact customer-service, warehouse, and a variety of other positions. And although many tech pros may assume they’re safe from automation, there are signs that these platforms are getting much better at tasks such as coding and systems monitoring.

Forrester isn’t alone in predicting A.I.’s shorter-term impact on the job market. An October 2018 report by the World Economic Forum suggested that machines will take over more than half of the world’s current workplace functions by 2025, but that employers will gradually retrain affected employees.

“While nearly 50 percent of all companies expect their full-time workforce to shrink by 2022 as a result of automation,” the World Economic Forum added in a note accompanying its data, “almost 40 percent expect to extend their workforce generally and more than a quarter expect automation to create new roles in their enterprise.”

So PepsiCo isn’t alone in its pursuit of automation to make things even more efficient, even if that costs many humans their jobs in the process. But with the company coming off a solid financial quarter, the decision to overtly announce “relentless” automation comes off as a potential PR disaster in the making; workers are wary of automated systems’ impact on their lives, and quick to voice their displeasure over such things. The rise of automation may even inspire continued pushback from unions and advocacy groups.

Meanwhile, PepsiCo plans to use the money saved by automation to power its product roadmap. “Across snacks and beverages, we’ll invest to capture a greater share of consumption occasions, from indulgent to functional, social to individual, value to premium, and across dayparts from morning to night,” Laguarta said.

Consumption occasions? Dayparts? Sounds very… robotic.

2 Responses to “PepsiCo ‘Relentless’ Automation Shows Cost to Jobs”

  1. With a forced minimum wage of $15.00 an hour, I think that automation in the fast food arena is a sure bet. Certainly workers will be needed, but the economic reality of an artificial hourly wage will make it attractive to invest in kiosks and other new technology.
    Is it better to be employed at $10.00 an hour or jobless at $15.00?
    The real losers will be the kids who need entry level jobs. Minimum wage jobs are not intended to be living wage jobs. The jobs are, and have always been, employment that teaches the young about responsibility and to instill a work ethic.
    Those that will get paid $15.00 today will be the ones on welfare tomorrow.

    • Wow, you must not know your history. This is a direct quote from FDR who started the push in the USA for a living wage and explaining some surrounding circumstances for you.

      “In his 1933 address following the passage of the National Industrial Recovery Act, President Franklin D. Roosevelt noted that “no business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”

      “By ‘business’ I mean the whole of commerce as well as the whole of industry; by workers I mean all workers, the white collar class as well as the men in overalls; and by living wages I mean more than a bare subsistence level — I mean the wages of decent living,” he stated.

      A federal minimum wage wouldn’t be permanently mandated until 1938 under the Fair Labor Standards Act, the same bill which prohibited child labor and limited the workweek to 44 hours. Even then, the idea was the same: ensure that businesses have to a) pay people for the work that they do, and b) that the payment is at least enough to live on.“

      Try again?