Nestlé has announced a proposal to close down a baby formula factory in Co. Limerick, threatening the jobs of hundreds of workers, because China’s plummeting birth rate has meant less demand for the product.
“Today, we are announcing a proposal to cease operations in our Wyeth Nutrition infant formula factory in Askeaton, Co Limerick, Ireland by Q1 2026. We propose to close the co-located R&D centre by Q1 2025,” the company said in a statement, adding that they would be consulting with all employees and their representative unions.
“Regrettably, today’s announcement means approximately 542 colleagues will be placed at risk of redundancy,” the company said.
The facilities were part of Nestlé’s acquisition of Pfizer Nutrition in 2012. Operating as Wyeth Nutritionals Ireland Ltd. (WNIL), the factory creates infant formula products exclusively for export to markets in Greater China and Asia. The factory currently employs 491 workers, while the R&D facility employs 51 workers.
The company explained that birth trends in China has led to a fall-off in demand for the product.
“External trends have significantly impacted demand for infant nutrition products in the Greater China region,” they said.
“The number of new-born babies in China has declined sharply from some 18 million per year in 2016 to fewer than 9 million projected in 2023. The market, which had previously been reliant on imported infant formula products, is also seeing rapid growth in locally-produced products.
“To adapt to those changes we are proposing to transfer the production from Askeaton to two existing factories – Suzhou, Mainland China and Konolfingen, Switzerland.”
The company said that the proposals, which have been “carefully considered,” are “no reflection on the excellent contribution made by our employees in Askeaton over many years.”
“To date, we have not been able to find a buyer. Therefore, we will commence a meaningful consultation process with our employees on a proposed closure. In parallel, during this consultation we remain open to approaches from a credible buyer.
“We regret the uncertainty this announcement will cause our colleagues and their families, and we will make sure they are supported fully throughout this process.”
The Chinese Communist Party’s Two-Child Policy was implemented in 2016 as a replacement for the One-Child Policy, which had been in place since 1979. The One-Child Policy was introduced to control population growth but led to a series of social and economic problems, including an ageing population, gender imbalance, and labour shortages.
The shift to a Two-Child Policy was aimed at mitigating some of these issues by allowing families to have up to two children. The policy change was also intended to stimulate economic growth by increasing the workforce and encouraging consumer spending.
However, the Two-Child Policy did not lead to the surge in births that the government had hoped for. The cost of raising children, along with urbanisation and changing societal attitudes towards family size, were factors that contributed to lower birth rates despite the policy change.
In 2021, China announced a further relaxation of its birth restrictions, moving to a Three-Child Policy. This new policy allows families to have up to three children and comes with additional incentives such as tax breaks, maternity leave, and childcare support to encourage larger families. Nonetheless, it remains to be seen whether this latest policy will effectively address China’s demographic challenges.
Gript recently asked Irish Social Protection Minister Heather Humphreys whether her government had any plans to increase Irish birthrates to stem the tide of demographic decline. Her response can be viewed in full below.
Irish Social Protection Minister Heather Humphreys, who is responsible for pensions, says she's not aware of any plans the Irish government has to increase birthrates, despite the demographic timebomb threatening pensions long-term. Question by @Ben_Scallan #gript pic.twitter.com/SBV3lGPnai
— gript (@griptmedia) October 10, 2023