These cuts hurt St. Louis deeply. People outside of our city are not aware of how much Anheuser-Busch is intertwined with our city and it's history. Over 1,000 people will be laid off in St. Louis.


By Jeremiah McWilliams, Tim Bryant and Tim Logan
Anheuser Busch is now called A-B InBev.

ST. LOUIS POST-DISPATCH
12/09/2008

It didn't take long. Three weeks to the day after InBev, of Belgium, took over Anheuser-Busch, of St. Louis, the combined company announced sweeping cuts in its work force.

A-B InBev is slashing 1,400 salaried jobs in the U.S., with an additional 415 contractor positions eliminated as well, the company said Monday. More than 250 open positions in the U.S. will remain unfilled.

The cuts to eliminate overlapping staff were expected but were dramatic nevertheless. They were aimed squarely at Anheuser-Busch's St. Louis headquarters at One Busch Place.

More than 1,000 of the lost jobs are in St. Louis. The local cuts amount to more than 3 percent of A-B's full-time, global work force before the merger, or about 1 percent of the staff of the combined company. The primary groups affected are engineering, information technology and other corporate positions. The cuts will come at the Pestalozzi Street facility and at A-B's Sunset Hills campus, which houses IT and other functions.

The cuts by Anheuser-Busch InBev are part of an effort to eventually achieve $1.5 billion in annual "synergies." The company is under pressure to pay down $45 billion in debt that it needed to ink the takeover.

"These actions are pretty consistent with what InBev has done in other acquisitions," said bond analyst Craig Hutson. "It shouldn't be a surprise to too many people."

Big questions remain, including which areas could be cut next.

Monday's announcement might be the largest single blow, analysts said. Further cost savings could come from tightening benefits or perks. A-B InBev did not make executives available on Monday to discuss the actions.

"Anheuser has not been run as the most efficient of companies," said Hutson. It "has an opportunity to change that."

Cutting costs is entwined in InBev's corporate DNA, hearkening back to its roots in Brazilian investment banking. With billions of dollars in debt payments coming due, the company needs to cut rapidly to make good on its massive $52 billion investment in Anheuser-Busch.

"They're going to look at everything," including A-B's sweeping advertising budget, said Morningstar analyst Ann Gilpin. "I don't think anything is particularly safe."

CUTS AMID BEER BOOM

Outside A-B's corporate office complex on Lynch Street, it seemed like a typical Monday. Barley scented the air. Tour buses rumbled through. Employees came and went.

Most didn't want to talk about the cuts. They didn't know anything yet, they said, or they were worried for their jobs. A few shot dirty looks at the TV news crews that have become an all too common sight in recent months, as the merger with InBev progressed.

The mood inside was "somber," one woman said as she walked to the bank. No one knows just who will lose their jobs yet, she said, or whether there are more cuts to come.

"There's just a lot of uncertainty."

One fear is that InBev will be so aggressive with its cost cutting that it will end up hurting itself, Gilpin said. In the U.S. market, you have to spend money to make money, and losing top marketers or people with good relationships with crucial beer distributors could backfire, she said. Morale is already bad after InBev swooped in with what was, for all intents and purposes, a hostile bid.

One thing is clear. The cuts did not come because of business struggles at Anheuser-Busch. Shortly before the takeover, A-B posted the best quarterly results in recent memory. The company said it is "pleased" with its U.S. beer sales and will "continue to invest in growing our brands."

But in the meantime, there will be lots of empty chairs. Monday's announced cuts are in addition to the retirement of roughly 1,000 A-B employees this year under a $1 billion cost-cutting plan announced this summer. Busch Entertainment and the company's packaging division were left untouched in this round of layoffs. Members of the Teamsters union were also protected from the cuts.

"These decisions are a result of a careful review of each department," according to an e-mail to employees sent by A-B President Dave Peacock and Luiz Fernando Edmond, president of A-B InBev's North American zone. "These were not easy decisions, but were necessary for the organization."

The executives said the process would be "very difficult" because "many good workers who are trusted and valued in the organization will not remain."

A-B InBev said it will provide severance pay and pension benefits to affected employees based on age and years of service. Depending on those factors, laid-off employees will be eligible for as little as two weeks and as much as one year of severance pay at the rate of their full-time salary. They also will be offered outplacement services and other benefits during the transition.

The Missouri Division of Workforce Development said the state has offered to activate its "Rapid Response" team to meet with company officials and workers to help workers train for new careers.

St. Louis Mayor Francis Slay and Sen. Christopher "Kit" Bond, R-Mo., decried the timing and severity of the cuts.

"It's a real tough time to be let go," said Blair Forlaw, executive director of Greater St. Louis Works, a civic group that tries to keep technology talent in the area.

That said, St. Louis information technology jobs are open now in manufacturing, financial services and health care, which is undergoing the conversion to digital medical records, Forlaw said.

"It may be just a matter of getting your résumé updated and practicing your interviewing skills," she said.

Russ Signorino, a labor market analyst with the United Way of Greater St. Louis, said the cutbacks' effect on the region's economy will depend on the scope of the former employees' severance packages and how long they need to find new jobs. Even if the short-term consequence is slight, layoffs are painful when they involve "one of our great corporate citizens," Signorino said.

With roughly 6,000 local employees, Anheuser-Busch is the 11th-largest employer in the St. Louis area, according to Post-Dispatch calculations. The company has a Missouri payroll of $560 million and pays about $32 million annually in state and local taxes and fees.

InBev has promised to keep all 12 of A-B's U.S. breweries open, including the flagship in St. Louis. But analysts have predicted for months that deep cost cuts would be needed to justify the high price InBev paid to buy A-B. In addition, InBev chief executive Carlos Brito and his lieutenants have nurtured a reputation for relentlessly focusing on costs.

"To keep the business strong and competitive, this is a necessary but difficult move for the company," Peacock said in a statement Monday. "We will assist in the transition for these employees as much as possible."

so i take it the quality control position is no longer avalible

maybe that will create a job opening for Gov. Rob Blagojevich...from the corrupt state of Illinois...gulp !!

From what I heard today, he's going to jail. What a fool.

they tapped his private phones...they've been on his tail for over a year...but...he just didn't stop...they're saying that he wanted $500,000 for the senate seat...I'm hearing on the radio here that Jesse Jackson Jr. is going to be the Senator that takes O'bamas vacant seat...I think it's time for me to move outta here...are you fuggin' kiddin me ?...Daly...O'bama, Durbin [ Senator from Illinois ]...and...possibly Jesse Jackson Jr....damn !!...and...double damn !!...not to mention...GULP !!!!!

I haven't heard about Jackson. I'll have to see it to believe it. And there's nothing wrong with Obama.

nessuno commento !...

Maybe Budweiser will go out of business and Americans will start drinking real beer?

It really is too bad about Jesse Jackson.

He seemed to start with such good intentions. Unfortunately in some ways I think he has harmed the civil rights movement as much as he has helped it.

I have to wonder what Dr. King would think of him now.

I suppose we will never know.


Ten points for Quiet!!!!

Excellent reply.

What is next? Monsanto? Emerson Electric? Boeing?

This is going to be a hard hit for the entire St. Louis Metro area.

this is Jesse Jackson Jr....not the pain in the butt that you're thinking of...this is his son...he serves in the House...he's a well educated version of his father...although..with the same agenda...

Well, you have to look at it through Giocamos eyes Winx.

All you have to do is become a religious freak and completely rule out logic in your every day life. Then, you have to build a healthy hatred for all black people. From his posts Im assuming he hates any race that is not his own.

It will be a hard hit, Redshirt. It will be in more ways then the lay-offs.

Over the past ten years, they have contributed $370 million to nonprofit organizations.

There's more information about how they give back to the community on their website.

I don't think they'll be keeping that up. They donate to one of my favorite places, Forest Park.

Mmmmm New Belgium Brewery to the rescue. Or even Schlafly or Boulevard.

Indeed.

What agenda might that be?

haha Welcome to Michigan!

I drive by Schlafly on Manchester all of time. Sometimes they have bands there.