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Chairman and CEO Nandu Nandkishore has announced that Nestlé Philippines will invest more than PhP 1.3 billion at its production facilities this year, to further enhance its capabilities to serve domestic and export demand. Nestlé’s investments in the country over five years, from 2003 to 2007, will reach almost PhP 10 billion.
In 2006, NPI sales totaled PhP 69.1 billion, with exports accounting for PhP 6.4 billion or 9% of total sales. Nestlé’s four local production facilities consist of the Cabuyao Factory for infant and adult nutrition and milks, the Lipa Factory for breakfast cereals and beverages, the Cagayan de Oro Factory for filled milk powder and coffee, and the Aurora Factory in Quezon City for ice cream and chilled products. Nestlé factories manufacture products under popular brands NIDO, BEAR BRAND, NESVITA, CERELAC, MILO, CHUCKIE, MAGGI, NESTEA and NESCAFÉ.
The Cabuyao, Cagayan de Oro and Lipa Factories also serve as the Nestlé Group’s ASEAN Supply Centers for infant nutrition, filled milk powder and breakfast cereals, respectively. The factories manufacture these various products for Nestlé markets in Southeast Asia. In the Nestlé Group, the designation of Supply Center recognizes a factory’s world-class quality standards and efficiency levels.
The investments earmarked for 2007 will be allocated for such items as acquisition of manufacturing equipment and supporting infrastructures, including laboratories and automated process control systems, aimed at improving performance, quality and competitiveness.
NPI will increase its capacity to produce growing-up milks for the local and ASEAN markets. The demand for MILO, the leading chocolate-flavored drink for energy in the country, continues to grow and investments are being made to address demand. Production capacities for breakfast cereals and coffee are being upgraded to maximize output and increase productivity.
Alongside investments aimed at improving its manufacturing facilities, Nestlé also continuously invests in programs that help improve the farming methods of coffee farmers. Through its Nestlé Experimental and Demonstration Farm (NEDF) in Tagum, Nestlé offers farmers free training on modern coffee farming methods and good farming practices, and also provides them with high yielding coffee seedlings at cost price. The Company has also been actively promoting the Coffee-Based Sustainable Farming System (CBSFS), which encourages farmers to plant coffee as a main crop and have secondary crops such as peanuts, cabbage, and ampalaya in between coffee trees. This assures farmers ready income while waiting to harvest their first coffee cherries, which takes anywhere from 18 to 20 months.
Today, Nestlé buys 80% of the green coffee beans produced in the country at prevailing world market prices. The Company buys green coffee beans directly from farmers through its satellite buying stations that reach out even to farmers in very remote areas.
Nandu said the labor situation in Cabuyao, where a strike occurred five years ago, has had no effect on Nestlé’s decision to continue investing in the country. “Starting in 2002, soon after the strike, we continued to invest in our various facilities including Cabuyao. Having the designation of ASEAN supply center for three of our factories is an honor that showcases the world-class manufacturing capability and the competence of Filipino employees. Our factories prove that the Philippines can compete favorably with other markets in the region, as to quality, cost and reliability. This also allows the transfer of the Nestlé Group’s state-of-the-art manufacturing technology in infant nutrition, milk, coffee, and breakfast cereals to our people,” he explained.
The January 2002 strike stemmed from a dispute on the inclusion of the company-wide, non-contributory retirement plan in CBA talks with the Cabuyao Factory’s union. The strike was declared illegal and more than 600 workers were terminated after ignoring a DOLE return-to-work order. Last August, the Supreme Court ruled that Nestlé was not guilty of unfair labor practice when it did not include the retirement plan in CBA negotiations; that the Labor Secretary had properly exercised authority in promulgating a new CBA (2001-2004) for the Cabuyao Factory; that the retirement plan is a valid issue for CBA negotiations; and that both parties should resume CBA negotiations on the retirement plan.
The union has filed a Motion for Partial Reconsideration with the Supreme Court on whether Nestlé engaged in unfair labor practice. At the same time, Nestlé has filed a Motion to Clarify, asking the Supreme Court whom it should negotiate with, since all union officers have been dismissed, and what the CBA contract period should be for which the retirement plan will be negotiated.
Three groups of ex-employees have questioned the legality of their termination. The first two cases have been decided by the Supreme Court in favor of Nestlé, and a decision is pending in the third case. Nandu said that Nestlé will comply fully with the final Supreme Court decisions. Despite sporadic mass actions by the ex-employees, he said there have been no disruptions of production at the Cabuyao Factory.
“Our investments, expansion and our exports demonstrate our continuing confidence and commitment to support long-term economic growth in the country,” he said, adding that Nestlé’s expansion efforts have helped spur the local economies around its factories, generating thousands of jobs in downstream sectors that provide raw materials and services. In 2006, total taxes paid by Nestlé in the country amounted to some PhP 7.6 billion. NPI provides one of the most competitive compensation packages in the local food industry, with the average rank-and-file employee receiving PhP 23,000 a month.
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Nestlé Philippines, Inc. | Nestlé.com 
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