The new division, to be called Baking, Cooking & Spreading Co., will not – for now – include spreadable Hellmann’s mayonnaise or Marmite, will only apply to the business in Europe and North America,  is planned to be operational by mid-2015 and will remain 100% Unilever-owned. But sluggish sales and the growing North American preference for butter over margarine inevitably call into question the future of Unilever spreads.

Chief Financial Officer Marc Huët, who has been repeating to investors the need for Unilever “to reduce dependence on foods”, told investors that “spreads are an important part of our heritage, but this will never be a barrier to us taking decisive action.” While it  remains true that, as a company spokesperson was quoted saying in a press report on the spreads announcement, “the cash delivery [from spreads] is important to us”, the division is digestible enough (valued between EUR 5.5 and 8 billion) for a private-equity fund to snap it up in a debt-financed buyout now that leveraged buyouts are again growing in size.

Food and refreshments (beverages and ice cream) last year accounted for some 49% of Unilever revenue (see the IUF report on Selloffs and cash cows). Eliminating spreads would reduce turnover by some 7%. But food – even with spreads – and refreshments last year continued to deliver a higher percentage of profit than the non-food divisions, making them an essential cash engine for acquisitions. A stand-alone spreads division with its own financial accounting would presumably enable a more precise analysis of the profit sources within Unilever, generating new benchmarks and new pressure on workers, who already face very tough bargaining in spreads.

Above all, this latest development, following as it does the string of recent divestments, highlights the need for unions at Unilever to secure succession clauses ensuring that terms, conditions and trade union rights are carried over in any sale. Unilever’s Sustainable Living Plan includes sustainable divestments but has no commitment to sustainable employment.

Chief Financial Officer Marc Huët is showing powerpoint slides to investors titled “reducing our dependence on foods”. What, then, is the role and the future of foods at Unilever, a topic which has long engaged the financial press? Is the company “nearly done”?

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The proposed pay cuts are truly disastrous. Losses for a traditional machine operator would start at some GBP 6,000 annually, or 17% of current base pay. Loss of shift premiums and other allowances and performance benefits for some workers would the income loss to over 29% of current negotiated pay levels. Other employees could lose up to nearly GBP 15,000 of their current pay packet or a total loss of 31%, of which 21% would be from base salary.

Where is sustainable employment in Unilever’s ‘Sustainable Living Plan?’

The loss in pension benefits based on the management proposed change would be similarly catastrophic, coming on top of the 2012 changes to the UK pension scheme. With this new burden, employees face an increasingly uncertain future.

At the very last minute management agreed to modify its demand for an 8-hour/3 shift scheme, which would have some workers performing up to 6 consecutive 8-hour night shifts and 3 weeks without a meaningful break from work. In its place came a 12-hour scheme proposed by the union, but with no time for full discussion of the implications of the new arrangements or any of the company’s other demands.

Abandoning the proposed shift scheme was offered on condition that the union adopt a “neutral” position on the company’s entire proposal, whose pay, terms and conditions had to be accepted as a whole in order to allegedly secure the future of the site.  The union has consistently said it recognizes the need for flexibility and is open to negotiation but has run up against a stone wall. At the end of the extended consultation period, the company challenged the union’s “neutrality” and reverted to the original shift proposal! Unite responded that the union reserves the right to fully inform the members of the contents of the proposals and has no choice but to recommend rejection.

The company’s autocratic refusal to respond constructively to any of the union’s many proposals has been coupled to the insistence on removing some 30 employees – 14% of the current workforce – from the collectively bargained pay scheme by putting them on individual contracts with performance-based pay.

The union proposed to move from the current 39 hours to a 40-hour week, with increased flexibility on banked hours. The union offered a 3-year pay freeze for pre-2009 employees, with some adjustments to lessen pay inequality for the post-2009 employees hired on reduced pay. The company’s response was: “It’s not enough”, despite the cost savings.

The company won’t listen to, let alone bargain over, any of the union’s proposals and commitment to negotiate flexibility. Given the poisonous atmosphere created by management’s aggressive attitude, the company will have no difficulty filling its 40 proposed voluntary redundancies.

Unilever’s steadfast refusal to give meaningful consideration to the bargaining process, their veiled threats about the future of the site, and the unilateral decision to shrink the bargaining unit by putting a sizeable number of employees on individual contracts constitute a concerted attack on basic trade union rights, rights which Unilever claims to respect. Unilever’s insistence on unilaterally reclassifying jobs to eliminate accumulated skills, seniority and experience has already generated conflict and led to a strike in South Africa. The drastic cuts now unilaterally demanded at Purfleet will not be limited to that site.

Unite is planning to ballot for a full recommended rejection and will be preparing an appropriate response if the company continues to reject in practice rights it claims to respect in Unilever policy statements.