UNMASKING A GIANT

PART I. NestleA. ProfileTransnational Corporations (TNCs): enterprises which branch out to many parts of the globe to have a larger market for their products and an outlet to invest the capital they have accumulated. It is also known as a multinational corporation which operates in more than one country.

Nestle S.A. a classic example of a TNC. It started as a small enterprise single-plant family enterprise in Vevey, Switzerland in 1866 by Henri Nestle. It has become one of the worlds leading TNCs in the food industry and a world leader in beverage food, infant formula, chocolate and coffee. Among the top 50 in Fortune magazines list of the top 500 corporations in the world.

B. Philippine Roots1911 Nestle Philippines established its first trading house in Manila1944 Filipinos were introduced to instant coffee 1947 Nestle change its name to Filipro, Inc. which many believed was coined from the words Filipino products1962 first manufacturing plant in Alabang, Muntinlupa, Metro Manila1976 second Nestle plant in Cabuyao, Laguna was inaugurated 1979 San Miguel Corp. bought 49% of Nestle1984 Nestles Cagayan de Oro plant was completed in Mindanao

In 1990, Nestle Philippines was the second largest European owned company in the country after Pilipinas Shell Petroleum Corporation.

In 2010, according to Philippine Business Profiles and Perspectives Top Corporation (PBPPI), Nestle ranks at number 8 (Business Profiles 2009-2010 edition).

Part II. Nestles labor practicesNestles highly successful business operation is marred by the violence and harassment that characterized MANAGEMENT-LABOR DISPUTES. There was a time Nestle workers were harassed and even dismissed outright whenever they pressed for better wages and benefits.

A. Union StrikesUnion: An organization whose membership consists of workers and union leaders, united to protect and promote their common interest.

January 1, 1982: First Union Strike. The Nutritional Products Association of Free Workers (NPAFW) launched a strike after negotiations for a collective bargaining agreement reached a deadlock. Nestle management rejected the unions demand for wage increases and fringe benefits. The workers protested unfair labor practices as well as the nonpayment of an earlier Christmas bonus.

March 1982. Nestle management finally gave in to workers demands and entered into a COLLECTIVE BARGAINING AGREEMENT (CBA). The expiry dates of all CBAs in the company were to end in June 30, 1987.

BONDING TOGETHERNestle Philippine Workers Council (NPWC): an alliance of workers belonging to the labor unions in Alabang and Cabuyao and the employees union in Makati, Cebu, Davao, and Cagayan de Oro.

Union of Filipro Employees Drug, Food, and Allied Workers, Kilusang Mayo Uno (UFE-DFA-KMU): the unions further consolidated themselves under this banner in 1987

GRAND DECEPTIONAs tensions at Nestle intensified, workers benefits were arbitrarily withheld and withdrawn. The CBA was violated by management and harassment of union leaders heightened.

January 22, 1986 unions second strike, protesting Nestles unfair labor practices, union-busting attempts and the nonpayment of legally-mandated benefits.

A BETRAYALPresident Aquino declared TOTAL WARagainst militant labor groups.

The National Labor Relations Commission (NLRC) of the Department of Labor and Employment (DOLE) declared the then ongoing strike as well as the strike staged earlier in 1986 as both illegal. Nestle management dismissed the striking union officials and refused to release the unions fund in spite of a ruling of the Second Division of the Supreme Court.

B. INDUSTRIAL PEACE CONFERENCEIn November 1991, the pro-worker union prevailed and industrial peace pact was signed.

It turned out that Nestles profits from 1988 to 1990 reached P1,550 million more than enough to meet the P449 million three-year package the union requested.

C. NESTLE FAiLING ON CHILD LABOR ABUSE

Nestle falling on child labor abuse says FLA reportHumphrey Hawkesly, BBC NewsJune 29, 2012

The food company Nestle has been accused of failing to carry out checks on child labor and other abuses in part of its cocoa supply chain.

A report by an independent auditor, the Fair Labor Association (FLA) says it found multiple serious violations of the companys own supplier code.

The code includes clauses on child labor safety and working hours...

Ivory Coast, West Africa: leads the world in production and export of the cocoa beans used in the manufacture of chocolate and supplies Nestle, among other large chocolate producers, Ivorian cocoa.

Nestle is now taking direct responsibility for decreasing the risk of child labor abuse.

D. Partners in Development? The problems of high unemployment and low incomes can only be successfully resolved in the context of growth but the right type of growth. While the contribution of TNCs to the countrys gross national product (GNP) cannot be discounted, their activities must be judged in terms of whether or not they really help improved the working peoples quality of life and the over-all economic development of the country. Raymund Addun, Nestle: Whats Brewing?

PART III. The Silent SlaughterA. Nestles Marketing Strategies to Evade Restrictions on Promoting Infant Commercial Products:1. 2. AGGRESSIVE PROMOTION OF FOLLOW-ON MILK which NESTLE insists are not breastmilk substitutes. Follow-on milk carries similar brand name as the pre-starter formula and these are expressed by numbers. Ex. Nestogen 1,2,3,43. MARKETING OF HYPOALLERGENIC AND SPECIAL FORMULAS FOR LOW BIRTH WEIGHT AND PREMATURE INFANTS.4. ADVERTISING THE LOGO OR SYMBOL OF A MILK FORMULA instead of its brand name in gift items and assorted materials.5. GIVING OTHER NESTLE PRODUCTS AND RELATED PROMOTIONAL GIMMICKS6. VERBAL PROMOTIONS including TV advertisements.

Follow-on milk formulas are needed if it is recommended for a mother to stop breastfeeding. However, follow-on milks are mistakenly used as breastmilk substitutes. Aside from follow-on milk foods, CONDENSED MILK is also known to be a Silent Killer. Condensed milk is still used as an alternative milk food for Filipino babies. However, it is mainly sugar and it cant give babies their necessary dietary requirements. The office of the MATERNAL AND CHILD HEALTH (MCH) published a document entitled Milk Code Violations by Company (1989-1990). It listed Nestle as the leading violator of the Philippine Milk Code with six cases, with violations ranging from dissemination of advertising materials without clearance to unauthorized distribution of promotional gimmicks for infant formula products. Also listed were Nestles donations to health facilities and workers from 1987-1988 without DOH approval.B.

C. VICTIMIZING THE THIRD WORLD

BOTTLEFEEDING- identified by WHO AND UNICEF as worlds major health problem. With this, bottle-fed babies are 40 times more likely to die in their infancy than breastfeed babies.The international milk code and the Philippine milk code share one objective: to curtail the dangerous effects of corporate marketing of breastmilk substitutes while improving infant health by promoting breastfeeding.

THE MAIN PROVISIONS OF THE INTERNATIONAL MILK CODE.1. No direct advertising to the public 2. No free supplies to hospitals or clinics and no free samples or gifts to mothers. 3. No professional service representatives, mother craft nurses or similar personnel to be used in health care facilities. 4. No promotion of infant feeding products in health care facilities. 5. No gifts, personal samples or financial inducements for health workers.6. No words or pictures idealizing artificial feeding 7. No false claims about how close the milk product is to breastmilk8. No promotion of unsuitable products like sweetened condensed milk foe babies. 9. All information for health workers should be factual and scientific.10. All products should be of high quality and should take into account the climatic and storage conditions of the country where they are used.

*** In October 1991, the international baby food action network documented hundreds of codes violations worldwide and among 80 companies, the worst offender was nestle.1981- Philippines signed the international milk codeOctober 20 1986, President Corazon Aquino signed executive order no. 51the national code of marketing of breastmilk substitutes, breastmilk supplement and other related products. This is a law where it imposes penalties for violations, particularly 2 months to 1 year imprisonment or a fine of p1000 to p30000, or both, plus a recommendation from the DOH to suspend or revoke the license of health personnel and facilities as well as milk manufacturers and distributors involved in repeated violations (section 13). But alarmingly, the Philippine milk code allows firms to advertise and promote baby milk products with prior approval from an inter-agencycommittee (AIC) composed of the secretaries of health, trade and industry, justice and social services, and development.Nestle gave 35 Separate Donations To 15 Hospitals and Clinics And 10 Physicians In Metro Manila, Cebu, and Cotabato Worth Around P354,628. These are medical oxygen tanks, airconditioner, folding beds, blood pressure apparatus, air-shield incubator, refrigerator, and phototherapy.In 1991 , Balikatan at UgnayangNaglalayongSumagipsaSanggol (BUNSO), a national coalition promoting and protecting the health and rights of mothers and children, uncovered other Nestle practices which aimed to reinforce its hold over mothers and hospital personnel. IV. Nestles Economic Agenda

a. A Giant of SortsFor generations, Nestle commercials mesmerized the public into patronizing their products. It maximized its media, allowing it to expand its territorial domain in the country.b. Filling up Public CoffersAside from providing jobs, Nestle also contributes a lot to the government via tax payments. They also contribute to the community through donations.However, Nestle is also a heavy borrower. May even suspect that they only pay taxes in Laguna, wherein tax rates are low, disregarding their plants in other places.c. Strong EarningsNestles corporate performance, in terms of profits and revenues are phenomenal. But, their wages cannot even sustain a person.d. Impotent ImpetusAccording to free-market philosophy, foreign investment will stimulate growth in the economies of host countries. Thus, the government allowed foreign firms to operate in the country.e. Out to Shop: Nestles ProcurementAs Nestle became involved in manufacturing, the government hoped that they would:1. Stimulate the agricultural sector as their source of raw materials2. The dairy industry for milk products3. The packaging industry for their finished productsHowever, majority of their materials are still being imported from other countries, with only a small portion coming from the Philippines, most of which includes sugars, coffee beans, banana, pineapples, and soya beans.f. Well-NestledNestle has tried to convince farmers to cultivate robusta coffee, cacao, and soya beans. To lure farmers, they provided the seeds and technical assistance. In the end, Nestle assured farmers of a ready market.g. Coffee1979- Nestle propagated the robusta variety from Ivory CoastThey distributed these cutting to Bukidnon, Lanao, Basilan, Iloilo, Bacolod, Batangas, and Cavite. Slowly, they replaced traditional coffee varieties such as Arabica (kapengtagalog) and liberica (barako).As a result, farmers became more and more dependent on Nestle for seedlings.h. CacaoNestle also convinced farmers to adopt the cacao variety grown in Papua New Guinea, which, when fermented, is the main ingredient in Nestles Milo.i. SoyaNestle established a research and demonstration farm in Tupi, South Cotabato for their soya based products. They lent seedlings and technology to farmers and eventually signed a contract with them.They say that theyre helping the farmers, but in the end, theyre the ones who determine the price and buys their output.j. The Usual CasualtyWhether by intent or accident, Nestle has exposed farmers to the risks which accompany export crops, such as erratic price fluctuations, cancellations, and droughts. Come hard times, cacao, coffee, and dried soya beans are not exactly marketable, nor can the stave off hunger.k. The Best of Both WorldsProduction workers revealed that the company selects coffee beans of higher quality and sells these abroad, while those of lower quality are used for local products. Still, the local price of Nescafe is higher than its export price.l. Whipping Up the Milk IndustryAlthough milk is a very important nutritional requirement, 99% of our milk needs still come from outside the country. This makes milk expensive and beyond the reach of the average Filipino family. Milk, which should be a necessity, has become a luxury.m. Integration: Good or BadAlthough Nestle buys coffee from the local farmers, it has not changed the general state of the local coffee industry.n. Packing Them InNestle has whipped its competitors. What is appalling is that we inevitably find ourselves in the mercy of these foreign companies since they have the control over the supply of important food.

V. EpilogueThe experience of Nestle Philippines validates the common perception on big TNCs on third world countries that they are here simply for profit.

The crucial issue here is for the country, despite the benefits of TNCs such as Nestle, to be able to freely and knowingly pursue its economic and social objectives.