Siro: Dependence on Mercadona and cost overruns caused biggest snack crisis in Spain

Alberto García and Ana González met in 2007 at the Aguilar de Campoo de Siro production facility. biscuit company and main supplier of Mercadona in the country. He worked in maintenance. It’s on the production lines.

It is not uncommon for couples to be born in the factories of this town of Palencia (population 6,711), whose biscuit city is considered perfect. Siro has 320 workers Gullón touched a thousand employees.

“There was a lot of nerves, a lot of uncertainty at home, we tried to talk about the factory but in the end it always comes up, it’s hard to isolate,” says Alberto, 46. He has a seven-year-old son from his wife. and a house bought in Aguilar – “even though we still have a mortgage to pay off”.

In this illustrious town at the foot of the Cantabrian mountains, life was on track until October last year, when the company’s Competitiveness Plan was a document called upon to reorient the business. Predict storm clouds by putting numbers in white on black. The group’s debt reached 300 million euros, and finding financing to survive was limited to dreams.

Leaving Aguilar

The group’s four factories in Toro (Zamora), Venta de Baños (Palencia) and Aguilar de Campoo were at risk: More than 1,700 people could lose their jobs in the three Castile counties already severely affected by depopulation. Where companies like Siro are the primary methods for stabilizing the population.

“It wasn’t something we didn’t talk about, but I still thought we should break up with Aguilar because there’s nothing around here; The point is, it’s emptied Spain. You must go to the capital, to Cantabria, to Burgos…” Alberto came to stir.

According to the aforementioned Competitiveness Plan, to which EL PERIÓDICO DE ESPAÑA has access, the source of the Cerealto Siro crisis was the change in the relationship with Mercadona.

The biscuit group only worked for the Valencia chain from 1998 to 2018, when its founder and chairman, Juan Roig, changed. radically connect with suppliers. Mercadona has gone from having a single supplier per category – in this case making all the cookies, pastas, breakfast cereals, pastries, sliced ​​breads, cereal bars and pancakes – to promoting competition on the shelves and looking for suppliers by product.

Today Mercadona sells some Hacendado brand cookies made by Siro. But also others made by third party companies like Gullón, Brioixpan and even foreign companies like Swedish Continental Furnaces.

For Mercadona, the new model meant an increase in referrals and an improvement in margins, as this way it could choose the supplier that gave it the best price per item. For providers of an addictive lifetime service Mercadona was an unexpected plot.

Prices were a “decisive factor” in Mercadona’s strategy change, according to the Siro group. When asked how this newspaper’s Siro crisis affected him, the chain chose not to comment.

“Mercadona neither wants nor can sustain growth by opening new stores (…) The only way was to increase profitability. mercadona, consistently sourcing large volumes to highlight the prices it buys from suppliers”, said the document prepared by the cookie company.

Some suppliers, freed from the exclusivity required by the supermarket, had the opportunity to wake up and open up to new customers and the foreign market. Others, such as Siro, They tried to make up for the gap that Mercadona left them with other customers. However, they were not successful and their sales and profits fell.

“Getting efficiencies with new customers takes time. This efficiency path has been built over the years with Mercadona”, said document. To demonstrate this, the cookie company did a comparison of its margins with other companies. It is significantly lower in the rest of the commercial areas than in Mercadona.

“The group has started to lose references in favor of other competitors as prices are higher as it has a higher cost of production than other companies in the industry.” led to ‘lack of competitiveness’: wages above ‘legally established’, ‘very high absenteeism’ and ‘underutilized’ industrial capacity (none of the floors exceeded the 61% occupancy rate).

At the time of writing the Competitiveness Plan, Siro had accumulated a loss of 85m euros and a debt of 299m euros at the end of 2021. Job prospects were so bad that banks refused to issue new financing. According to the document, the solution was not only to find other customers, but also to cut costs by cutting fees. and changing working conditions, besides providing an influx of foreign investment, is something that is finally coming.

Weeks ago, Davidson Kempner and Afendis funds offered 180m euros in exchange for 75% of the company trying to save the company. Something not accepted by all workers’ assemblies, as it implies a significant reduction in purchasing power.

the company was like this on the edge of the abyss, one step away from bankruptcy.

After days of demonstrations, negotiations and sleepless nights due to an uncertain future, Siro executives, unions and investors have come to an agreement in principle. Early Friday, at three in the morning.

a bus to Madrid

The key meeting at which the deal emerged and was definitively approved by workers’ assemblies on Saturday took place hundreds of kilometers away. Where are the ships of the brand in the Madrid Ministry of Industry, Trade and Tourism?

Union representatives went to the capital in a minibus. He had appointed the Government Committee in Valladolid.

“We had prepared in case the meeting with the Junta de Castilla y León failed. The minister has been trying to find a solution for a long time.”Confirmed from Reyes Maroto’s team that the preliminary deal was sold as a victory.

The minister had been waiting for talks from Valladolid and with investors for several months, which continued until Friday morning. It was even decided to take a short dinner break around midnight and to continue the meeting. 33 sandwiches and soft drinks were purchased and water from vending machines. The minister paid out of pocket. At 3 o’clock the preliminary agreement was signed.

The head of the Junta de Castilla y León, the ‘popular’ Alfonso Fernández Mañueco was also personally involved in finding vitality for the company. “You must save him as he is”, He even said it at one of his meetings with workers’ representatives this week, when government partner Vox, which has the Industry, Trade and Employment portfolio, profiled itself.

The last meeting of the Ministry of Economy held on Thursday, in which the relevant mayors were also present, was again unsuccessful. Finished at 5 pm. On the street, between the Ministry and the Government Committee, a few meters away, the Government bus was parked. This was the last chance.

“They’ve kept him there since three o’clock,” laments the mayor of PP’s Aguilar, a fact that casts doubt on the ‘popular’ ranks whose officials were not invited to the meeting in Madrid.

“We have to learn that the important thing is to save jobs. It’s not about defending any political color, but governments act together”, assures EL PERIÓDICO DE ESPAÑA María José Ortega.

“We need to congratulate the workers who brought us a solution. It would be very serious to put 300 people on the streets. It is a very important professional capital. “We’ve already had traumatic situations here and we didn’t want to repeat them,” he said. The mayor recalled his disagreement with Fontaneda 20 years ago when he announced that he would close his factory in Aguilar.

Today, I had a personal experience with their workers that I will never forget. @CerealtoSiro. After a busy day, I came home today with the satisfaction of securing jobs for more than 1,700 families in rural areas thanks to good policy. pic.twitter.com/pKRIZcQKPz

– Reyes Maroto (@MarotoReyes) 11 June 2022

After eight months of protests, the facility was liberated. In fact, it was Siro who took over the debt and replaced the 212 workers.

Alfredo Alonso is chairman of Siro’s works council in Aguilar. the aforementioned father Like him, I was on that committee 20 years ago. Alonso Jr. The source of the conflict at Siro is also clear. When Mercadona left exclusivity, it failed to find the key to staying profitable.

“We wanted to grow as a Mercadona customer by following their guidelines, and once Mercadona opens up to other customers, we produce products with less margin and quantity,” he says. “Industrial management has been a disaster and Investments made with factories in other countries did not provide the expected profitability,” he adds.

“We hope not to repeat the same mistakes,” he said of the solution. finally found for SiroConsidering an investment of 120 million euros and a fluctuating average salary decrease of 2.8%, but anticipating an increase in purchasing power of up to 8% in four years.

Yesterday, at the signing ceremony of the agreement that ended the crisis, Held at the Ministry of Industry and attended by Fernández Mañueco, Alonso recalled the “difficult months” they went through and gave “thanks” for finding a solution. “I’ll be very short, I’ll go home to bake cookies, I know how to do it, and that’s what we have to do now,” said Mañueco and the minister in a well-matched speech. despite the previous week’s disagreements.

The resolution of the crisis gave all the heroism to the minister, who was praised by both the unions and the company for his mediating role. Reyes Maroto even went to the Toro factory on Saturday to witness the House vote, ratified the agreement with a majority of votes. The minister was present and clearly stated that day: “We should talk about the future or the near.” He moved visibly yesterday, he said: “We have accomplished a future project for Siro, but there is a commitment to continue working for the future of this Government and we will rekindle what was a success story in the past”.

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