Warning of more cuts at HP factory

Aug 17 2006 By Jon Griffin, Birmingham Mail

THE future of Birmingham's HP Sauce factory looked bleaker than ever today after rebel shareholders seeking seats on the Heinz board warned of further cost cuts.

A stormy AGM witnessed a boardroom challenge from dissident investors, including activist Nelson Peltz, who told shareholders: "Our plan is really very simple - to increase sales and bring down costs."

Mr Peltz and fellow rebel Peter May told the AGM Heinz's products were good - but said the company needed investment. But the warning that further cost-cutting is on the cards if the rebels win their fight will cast further doubt on the HP Sauce factory in Aston Cross and its 125 employees.

Parent group Heinz is already aiming to axe 2,700 jobs to save 355 million dollars a year, with five factories in Europe - including the Birmingham site - facing closure.

The Transport and General Workers' Union, which helped to organise a protest march in Birmingham in June, has warned of a boycott campaign to persuade consumers to shun Heinz products.

Meanwhile, the five rebel shareholders will not know for several weeks whether they have won their fight for seats on the board.

The under-fire chief executive William Johnson said at the Pittsburgh AGM that the sheer number of proxy votes - an estimated 60 million - had made it impossible to declare an early result.

Mr Peltz's Trian Group, which controls around 5.5 per cent of shares, is waging a proxy battle for five seats on the 12-member board.

Trian, stung by a 38 per cent slump in Heinz's share price, has criticised the company for selling businesses whilst urging further cost cuts.

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