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Executive Demand Eases
Among Food-Industry Firms

By Kelly Gates

Already sluggish hiring in the food-and-beverage industry will likely slow even more if the U.S. heads into a recession as expected. The disaster couldn't have come at a worse time for the industry, which was beginning to show signs of turnaround.

"The food-and-beverage industry has been soft in the past year anyway, but some [companies] were actually starting to rebound," says Tierney Remick, managing director of the North American consumer practice in Chicago for Korn/Ferry International, a New York-based search company. "However, the attack on the country will, at least in the short term, stop food companies from experiencing the accelerated growth they expected to have."

Food-industry companies often grow and increase earnings by making strategic moves, such as an acquisition, new-product launch or hiring new leaders, says Dave Hardie, a New York-based partner in consumer products for Heidrick & Struggles, a Chicago recruiting firm.

But companies will likely suspend such activities until they know how severely the economy will be affected. "Unless a company has already made firm plans for a strategic change, my guess is that there will be a pause until everything stabilizes again," says Mr. Hardie.

Revenue Generators

Following numerous mega-mergers in 2000, industry watchers expect slow growth domestically -- 2% -- and more opportunity overseas in 2001. Many major food-and-beverage companies have been trying to recover from several quarters of negative earnings by focusing on cost-cutting and increasing profits. This has reduced the need to hire executives in staff functions and increased demand for professionals in revenue-generating areas, such as sales and marketing.

"Companies have pretty much stopped hiring people in areas like human resources and public relations because these are big cost centers," says David Bowman, chairman of Lincolnshire/TTG Consultants, Inc., a search company in Los Angeles. "However, sales and marketing generates revenues, so that's where most companies are placing their emphasis."

Meanwhile, small to mid-sized companies have taken advantage of recent industry consolidations to recruit presidents, chief financial officers and other senior managers leaving newly merged organizations.

"The two major trends affecting the job demand in the food industry are negative earnings and consolidation," says Mr. Bowman. "After two or three quarters of less-than-stellar earnings, boards begin demanding cost-cutting measures, and the executives who are safe from earnings-related cuts might eventually be downsized after a merger or acquisition anyway," says Mr. Bowman.

ConAgra Foods Inc., Campbell Soup Co., H.J. Heinz Co., Kellogg Co., Sara Lee Corp. and Tyson Foods Inc., all have had earnings warnings this year, says David Nelson, food analyst for Credit Suisse First Boston in New York.

"Most of these companies are now at a new base from which they can grow substantially, but they certainly haven't done well in the past 12 to 18 months," says Mr. Nelson.

Campbell Soup Co. is stepping up its marketing spending by 15%, or approximately $200 million, for fiscal 2002. "Other companies are following suit and seeking senior vice presidents of sales and marketing. Such professionals must have between 15 and 25 years of experience and proven track records of success at other food or beverage companies," says Mr. Bowman. He's searching for senior and mid-level sales and marketing executives and professionals to fill openings at five food-and-beverage companies in North Carolina, Pennsylvania, Florida, New York and Boston.

Financial Savvy

A few large companies also are searching for chief executive, financial and operations officers with strong financial backgrounds who can help turn around declining performance, says Ms. Remick. However, she says the demand for chief officers is strongest at smaller companies.

"At this time, there's a much greater opportunity for these executives to find work at smaller companies because consolidation has eliminated a lot of the positions at larger food companies," says Ms. Remick. "Companies want chief officers with at least 20 years of experience, and they're seeking candidates who have proven records of managing in a multi-functional position with lots of [profit and loss] experience and a strong sense of strategy and business development."
At larger companies, senior executives often earn packages that include annual base salaries, annual [bonuses] and stock options in the seven-figure range, says Ms. Remick. But as the declining stock market erodes the value of options, some companies, including Coca-Cola Co., are restructuring executive compensation packages, says Mart Kilpatrick, a partner with Zay & Co. International, a search company in Atlanta.

"Base salaries are going up somewhat at some companies because stock options aren't as valuable as they used to be," says Mr. Kilpatrick. "Coke has been restructuring its compensation packages and offering less stock options and more base salary because it's hard to entice top executives with stock that hasn't done well in the past few years."

As opportunities at small to mid-sized firms are picking up the slack as openings for presidents as major food-and-beverage companies dwindle, says Ray Schorejs, vice president of recruiter Roth Young of Houston. Most firms seek candidates who have been presidents or chief operating officers at larger companies previously. "We've placed several presidents into small food companies this year after they were downsized from larger companies as a result of consolidation," says Mr. Schorejs. "They want candidates with strong financial backgrounds, experience with P&L and budgeting, an entrepreneurial spirit and a thorough understanding of the industry." According to Mr. Schorejs, presidents at smaller companies can earn between $180,000 and $220,000 in annual base salary, plus bonuses and equity.

Downsized After Six Years

Indeed, consolidation has had an impact on many senior executives in a variety of positions. Consider Rick Krombach, who after more than six years as senior supply-chain manager for Borden Foods Corp. in Columbus, Ohio, has been job hunting since the company sold its businesses to multiple buyers.

"There's a lot of consolidation taking place in the food industry, which means that people like myself run the risk of being downsized," says Mr. Krombach.
As a manager with 24 years of experience in logistics and supply-chain management, Mr. Krombach expects to be re-employed soon. He feels fortunate to be a logistics expert, since logistics is in demand outside the food industry. Nevertheless, he expects his job hunt to be a little sluggish in the third and fourth quarters as companies "try to meet numbers at the end of the year, especially this year," he says.

So far, Mr. Krombach has been on two interviews with companies outside the industry and hasn't actively pursued a job at another food company. "I have no aversion to working in the food industry again, but I'd definitely think twice about taking a job with a company that might consolidate in the near future," he says.
In manufacturing areas, the demand for quality-control and quality-assurance managers declined during the second and third quarters due to cutbacks, says Dick Stoltz, president of search firm Management Recruiters of Columbus, Ohio.
"Although quality is still important, it tends to go by the wayside during rough times, and companies don't hire as much in this area unless it's absolutely necessary," says Mr. Stoltz. "Most of the hiring right now [in manufacturing] is in production, engineering or operations, but due to cutbacks companies are mostly hiring to fill critical vacancies in these areas."

According to Mr. Stoltz, plant managers must have a degree in food science or other food-related area plus food-manufacturing industry experience. Base salaries for superintendents range from $60,000 to $70,000, while plant managers earn between $80,000 and $150,000, depending on the size of the company.

Beverage Manufacturers

According to Mr. Kilpatrick, demand for professionals at beverage-manufacturing companies also has weakened in the past few months as companies like Coca-Cola Co. and PepsiCo Inc. concentrate on product development.

"Beverage companies are focusing all of their attention on professionals like vice presidents of product development who can create new product lines that will help them compete with other companies," he says. "They want people who can either create extensions of the products they have or come up with new products so they can encompass all consumers' tastes with a wide variety of products."
Vice presidents of product development must have proven success developing new product lines at other consumer packaged-goods companies, says Mr. Kilpatrick. Vice presidents of product development earn base salaries ranging from $175,000 to $225,000, plus bonuses and stock options.

Other positions like vice presidents of manufacturing, directors of operations, production managers, quality-control managers and warehouse and logistics managers are being filled primarily due to turnover, says Mr. Kilpatrick.
Beverage-company manufacturing vice presidents typically need experience managing multiple-plant operations at other food-manufacturing companies, preferably at another beverage company. Plant managers must have experience managing a soft drink, juice, bottled water or other beverage plant.

Depending on the size of the company, vice presidents can earn between $125,000 and $250,000 in annual base salary, plus bonuses and equity, says Mr. Kilpatrick says. Plant managers earn between $75,000 and $100,000 in annual base salary, plus bonuses and stock options.

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