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Food giant slims down.
The world's largest packaged food and drinks company Nestle, says it will cut 16000 jobs worldwide over the next two years.
The Swiss firm said the layoffs would save more than US$1.2 billion.
It's World Business Report from the BBC World Service.
This is Andrew Peach.
On the way, we'll hear about the pressures on the owners of brands like KitKat and Nestle.
Also today why the US Chamber of Commerce is trying to stop the Trump administration charging 100000 for work visas.
And does the new handheld Xbox live up to expectations?
First, the world's largest packaged food and drink company, says it's cutting 16000 jobs over the next two years.
The Swiss firm Nestle owns some very well-known brands.
Nestle Crunch is so good, it's music to your mouth.
Creamy milk, chocolate is the melody.
Crispy crunchies are the harmony.
The two together are music to much.
Let's calm a few bars of music.
Farm fresh eggs, golden brown sugar, creamery butter.
With these natural ingredients, wouldn't it be foolish to use imitation shelter flavor chips in my toll house cookies?
You see, the only way to make genuine Toll House cookies is with Nestle's semi-sweet real chocolate morsels.
Nestle's real chocolate makes them rich and chewy and chocolatey.
Real chocolate.
That's what makes Nestle's Toll House cookies taste so special.
And so chocolatey.
Whee!
Come on!
Gotta get some this quick, quick, quick, quick!
Mmm!
That rich, smooth, chocolatey flavor!
It's simply out of this world!
Ow!
Nesquik?
Nice, but why are there two glasses, Jonathan?
That one's full.
Don't tell me.
The bunny.
You always blame it on the bunny.
Come on, we're going to be late.
But, Mummy, Mummy, there is a bunny.
Of course there is.
Have another Nesquik and blame it on the bunny.
Nestle says they need to save US$1.2 billion.
Georgia Plummer is the principal analyst at Kantar, the global market research company, and live with me on World Business Report.
Georgia, Nestle's in the news for all the wrong reasons.
Why?
Hi, Adam.
So I think it's important to note that this announcement from Nestlé obviously the title of 16000 jobs is concerning, but it's not limited to Nestlé, unfortunately.
We know that the consumer packaged goods industry is extremely challenging at the moment in the current global climate.
And I think both retailer and manufacturing companies are looking to reduce costs and drive efficiency.
And and look to reduce prices in order to drive performance and profit.
And I think we also need to recognize that the current economic climate, whether that be tariffs, despite a large proportion of Nestle's manufacturer being in the US remains a big issue.
We've got a very volatile supply chain in terms of items such as chocolate and coffee.
There's been a big increase in GOP1 medication, which is leading to shoppers reducing their spend in some of Nestle's key growth categories.
And also we've seen the rise of the growth of retailer-owned brands and consumers being more value conscious and trading down.
So, it's a really challenging climate at the moment for these manufacturers.
And ultimately, they're making tough decisions in how to drive efficiencies and save money.
It seems part of a trend whereby we've seen over the years companies get bigger and bigger and bigger and buy up smaller companies to create these giants.
And now we're heading in the other direction almost.
Yeah.
So, you know, parent companies like Nestle, you've got Unilever, you've got P&G, Coca-Cola.
Traditionally buy up smaller brands, those that might be meeting kind of new consumer trends and really resonating with customers.
They can get bought by some of these holding companies with the intention to grow them.
It saves them money if a company is already meeting the needs of some of these new trends, such as wellness or environmental sustainability.
They can buy those companies instead of investing to create their own.
So we have seen in the past these companies buy up smaller brands, but we also see them divesting in these brands that are not profitable.
And I think that's what we're seeing is these companies are having to look at their portfolio, understand what is profitable and what is not and ultimately make decisions which one to grow and which ones to close.
So, no, it's not something that's only happening with Nestle.
It's happening across the board.
Georgia, thank you very much indeed.
Georgia Plummer from Kantar.
Now also with me live is Quyen Nguyen, Chief Investment Officer of Equity Strategies for Research Affiliates, live from New York.
What do you make of this Nestle development, Quyen?
Well, I think it's about time.
I mean, Nestle has been facing growth challenges for quite a while and investors don't like what they see.
So the plan of cutting employees and reinvesting in marketing makes sense.
What they're trying to do is contain costs and grow their top line at the same time.
We'll see if it works or not, but they are not alone in facing these challenges in the consumer products market.
Very interesting.
We'll come back.
We'll keep monitoring what's happening with Nestlé.
Obviously, we're talking about a two-year timescale for these job losses to be rolled out around the world, but very worrying in places where Nestlé is a big employer, right in many countries.
Yes, I would say that it's a worrying development in many places.
But I think ultimately jobs cannot be stable unless corporations that create these jobs are profitable.
And so, you know, we are in a world in which we always have to have that tension.
Right.
Yes, it's true.
Workers want jobs and they don't really like it when they see wealthy people benefit.
But at the same time, the reason Nestle is doing this is not because they say we don't like workers.
What they're saying is we're not profitable enough.
We are not growing enough and we just can't continue to employ all everyone.
Quay, please stay with me.
I want to talk about a story that's been breaking in the last hour now.
H-1B visas allow US employers to hire skilled foreign workers on a temporary basis.
Now, last month, the Trump administration announced plans to charge $100,000 for them.
Now the US Chamber of Commerce, representing 3 million businesses around the country, has filed a lawsuit to try and stop them.
In a news release that we've seen in the last few minutes, the Chamber called the new fee unlawful, saying it overrides the provisions of the Immigration and Nationality Act that govern the H-1B programme, including the requirement that fees be based on the actual costs incurred by the government in processing the visas.
Live to our North America tech correspondent, Lily Jamali.
Were we expecting this, Lily?
I think we were, because the Chamber of Commerce, as you mentioned, represents millions of American companies.
And we knew that within the tech industry, there was quite a bit of consternation about this move.
Even as these tech CEOs across the industry have been trying to stay on the right side of Donald Trump, try to sway some of his policies on this particular issue, which is so important to the, They haven't had much success.
So I think a lawsuit, I think we were expecting this, it's fair to say.
We've seen quite a lot of legal challenges to all sorts of measures that the Trump administration has introduced.
And while sometimes they can delay the measures, they don't usually stop them.
Yeah.
And I think what's noteworthy here is that these companies are being pretty quiet, by and large.
The Chamber of Commerce is out there to represent them on this issue.
And what we're hearing is we're suing the Trump administration.
But they also are lavishing praise on Mr Trump for what they call his agenda of securing permanent pro-growth tax reforms and other things such as unraveling regulation, which they have long argued has stifled growth.
So You know, a couple of CEOs have come forward and issued some thoughts, Elon Musk among them.
But I think they're really trying to get their voices out there through the chamber.
And the Chamber of Commerce is also trying to spin the argument here that this isn't just harmful to the big companies.
It's harmful to the small and medium sized companies where this could really impact their business, their ability to operate in this economic environment.
Do the firms just want to be able to hire whoever they please?
Are they basically opposed to the Trump administration's mantra of wanting jobs to go to American workers?
I think that they will argue that there's really not the inventory of American workers who can do the kinds of jobs that these folks come here from China and India and a couple of other countries primarily to fill.
There is a reason.
They will say that they have to look beyond America's shores to bring these workers in and get those jobs filled.
Lily, thank you very much indeed.
Back to Kwe and Wen in New York.
What do you make of this story that we're all just getting our heads around, Kwe?
So, again, I think this is somewhat expected.
But I would also mention that it's not just the technology industry that is dependent on foreign workers.
You find a lot of H-1B visas in the finance industry, in the medical research industry.
I mean, these are people that lots and lots of industries need and like to hire.
Yeah.
Now, let's talk about the markets, 10-year US bonds.
What's happening with them?
Well, today, 10-year US bond yields are down below 4%.
It's almost as if the bond market is saying they're not worried about inflation and a little bit more worried about growth.
And I think this just sort of ties into things that we've been talking about in terms of Where is the growth going to be, not just for companies like Nestle, but for the economy as a whole.
And that is something that is also worrying for the rest of the markets at this moment.
OK.
We've obviously got this US government shutdown still in place.
It's kind of like disappeared in a sea of other news.
And there are lots of stories breaking right now in the United States.
What's happening with the shutdown?
What impact is it having?
And is anyone looking like they might resolve it anytime soon?
You know, it's actually been one of the shutdowns that is very quiet.
It's almost as if the people you know except for the government workers that have been fired, people just don't notice that it's been shut down.
I think it's really because people have become inured to the periodic shutdowns that we have.
But one of the things that it's having an impact on is that we're just not getting any data about the economy.
And so we're sort of flying blind.
Seems like everything is slowing down.
Markets are reacting badly to it today.
But we don't really know.
I mean, people are estimating and guesstimating, but it just causes everything to become less certain and a little bit more volatile as a result.
Right.
So obviously the longer it goes on, the more it will impact people who might be thinking of making an investment decision, that kind of thing.
Yes.
I mean, and it's not just the government shutdown that will impact that.
It's also the fluctuating policies around business and trade.
What's happening with H-1Bs?
What's happening with trading rules and tariffs?
The more uncertainty there is around how to do business, the less likely it is that businesses will actually make investment decisions, will actually make CapEx decisions.
And over the long term, this is not helpful to growth.
Tell me what's going on with precious metals and why we should care.
So I think precious metals is rallied significantly.
Gold is above 4,000.
I think silver is up something like 80% or 90% year to date.
And people are looking at it.
And at first, when people started looking at the rally, they're saying that this is really an inflation hedge.
But what this is really saying to me is that It's really a hedge against the financial system.
People are worried that they don't know what's going on in the business context.
They don't know if businesses will continue to expand and grow.
They don't know with the shutdown, for example, what's going to happen to the dollar.
And if interest rates are going to go lower, the opportunity cost of putting in something that doesn't give you a dividend or an interest payment, like gold and silver is, is reduced.
And so you know, I think you look at it, and what's interesting about gold and silver right now and I guess maybe this has always been the case for them is that it's really not so much about inflation as it is about growth and the uncertainty around that.
More with Quay on the way.
This is World Business Report with Andrew Peach here on the BBC World Service.
Japan is known for its political stability.
Like many countries at the moment, it's experiencing political turmoil.
Sonia Kachiuchi, the newly elected head of the Liberal Democratic Party, is in talks with the Innovation Party, a right-leaning party in Japan, in a bid to become prime minister in a few days.
But what economic challenges does the world's fifth largest economy face, and how might she tackle them if she gets the job?
Well, Chihiro Takashita is professor at the University of Shizuoku and live with me on World Business Report now.
Let's just assume for the sake of argument that this is how it's going to go.
The coalition talks work, she becomes prime minister.
What's she going to do that changes Japanese economic policy, do you think?
Firstly, basically targeting the expansion of fiscal policy.
For example, reducing their gas tax and supporting wage rise of deficit companies, supporting local government grants, etc etc.
Basically almost abiding very closely with the policies that Mr Abe used to have, which obviously is very much welcomed by the economy and basically corporations as a whole.
What's the situation with the Japanese economy now?
Because after all this long period of stability, it's under quite a lot of pressure.
Well, you know we are getting inflation, like any other countries, but it's not like a demand pool inflation that you're seeing in the United States or partly in the United Kingdom.
It's cost push inflation, so it's not that serious.
The real problem here, I think, is that we need to have a rejuvenation of corporations here and taking risks and basically, you know, paying the employees.
Because in Japan, for the past 20 years, the wage rise had been virtually zero, which is quite amazing.
So we really need to see some jab in the arm about the rejuvenation.
And that is exactly what, you know, Ms.
Takaichi is targeting.
She's trying to basically propel and give a wake-up call to these companies, saying that it's going to be a new era as a whole.
So we need a mindset change, particularly amongst the senior management in Japan, I think.
A lot of countries are wrestling with what attitude they should have to China diplomatically, economically.
Where is Japan on that and what might change?
It's changing very rapidly because of Ms.
Takahichi likely being the prime minister.
She's the one who's basically trying to propel or introduce anti-espionage system in Japan.
And Japan is the only country that doesn't have it.
In England, you're prison for life.
In the United States you might be sentenced to death.
Russia and China obviously, but you know Japan, you walk out free.
So you know, basically she's trying to introduce these measures to cope with the aggression that we're feeling from China, both on the surface and on the background, because we all know that many of the politicians you know, not only the opposition, but even the members of the LDP are being very much and I'm going to use a very politically correct word here influenced by the Chinese authorities.
So basically, you know, we are going to have much more of a normalized stance against China if Ms.
Takeuchi becomes a prime minister.
Chaijiro Takashita, thank you very much indeed for being with us.
Now eyes are on the shipping industry this week because the International Maritime Organization is expected to hold a crucial vote on whether to adopt a global fuel standard and carbon rules.
The plans include penalties for excessive emissions, rewards for using climate-friendly fuels, but they're in short supply.
To find out more.
Adrienne Murray has been to Kassu in the south of Denmark to go and see Europe's first commercial-scale plant making green methanol.
Field at a field.
A sea of solar panels surrounds this brand-new plant and its maze of silver pipes and towers.
Operated by Danish firm European Energy.
Around 42000 metric tonnes of green methanol will be produced here each year.
It's a fuel with a low net carbon footprint and also an ingredient for plastics.
Knud Erik Andersen is the firm's CEO.
So we replace a fossil CO2 footprint with a CO2 neutral product.
So a number of products in our daily lives can now be green instead of relying on fossil products.
We have a number of customers within the chemical industry and also within the transport industry.
Shipping giant Maersk is among the buyers, while toy maker Lego will produce plastic bricks and drug maker Nova Nordisk will use it for injection pens.
Methanol is already widely used, but until now it's been made with fossil fuels.
But here, energy is supplied from a 300 hectare solar farm, the biggest in northern Europe.
This is where the power comes in from our solar facility.
We have the first building here.
Let's take a look.
And that renewable electricity is used to split water into oxygen and hydrogen.
The first big step of that process is taking place right here behind me in this enormous piece of kit called an electrolyser.
Under high pressure and heat that hydrogen meets with a supply of biogenic CO2 inside this tall reactor tower.
And the result is a clear liquid fuel.
This is the first produced pure methanol.
We are going to do 42,000 tonnes, so this is a small drop.
But the first drop is an important drop.
This green methanol plant is a major milestone, but sceptics say it's only a drop in the ocean.
Tobias Johanssonsen is a senior analyst at environmental think tank Concito.
It's green, but it's also very capital and resource intensive.
It's around four or five times more expensive than the fossil fuel equivalent today.
You would need new-build ships to replace the old ones when you go to the e-methanol route.
So it will take decades to decrease emissions.
As the industry comes under pressure to eliminate carbon emissions, cleaner fuels are in high demand and short supply.
However Maersk, which has invested in a fleet of 25 new container vessels that will run on methanol, expects volumes to ramp up from next year, as supplies from key producers in China also come on tap.
At its headquarters in Copenhagen, I spoke to Emma Mazzari, who's Maersk's head of energy markets.
So we can see that we're on the early journey of green methanol and alternative fuels.
We're starting from a very low base, of course, as these are new fuel markets that need to be developed.
But we can see that scale is really coming this decade and beyond.
Next year, we take delivery of a large offtake agreement we have signed with Goldwyn.
This is for half a million tonnes of methanol per year.
So this is really the first step to enable scaling of the methanol pathway for us.
Plants developing greener fuels are coming up in Europe, China and the US.
But to supply the thousands of ships that ply the world's seas, they'll be needed on an unprecedented scale.
Adrian Murray in Denmark.
Now, in the last few hours, the first ever handheld Xbox console has been unveiled.
Its makers, Microsoft, are trying to compete with similar consoles from Nintendo and PlayStation.
BBC tech reporter Tom Gherkin has had a play.
It feels really comfortable.
It's quite large.
It certainly looks like it's going to be heavier than it is.
It's surprisingly comfortable to hold is what I would say.
It's got grips like a controller.
Visually it's like they cut an Xbox controller in half and put a whacking great computer in the middle with a lovely screen.
Which means, yes, it's quite powerful and it can play a lot of games.
But to do that and not be too heavy means it's quite pricey.
It's actually more expensive than a PlayStation 5 or a Nintendo Switch.
It is the priciest thing on the market and I think that's because they're trying to make it really versatile.
It's got Windows 11 on it, so theoretically it can play basically any PC game.
Live to Seamus Blackley, best known for creating and designing the original Xbox in 2001.
Seamus, thank you for being with us.
What do you make of this one?
Well, it's a long time coming, right?
The biggest question that I used to have to field, aside from originally why is this controller so big?
Was when are you going to have a handheld Xbox?
And so I guess it's only taken a couple of years.
And until this point, the problem has been it being powerful enough.
Is that right?
Getting enough tech into a small enough space that you can hold comfortably?
Yeah.
That problem has been solved technically for a number of years and obviously it's a continuously evolving technological front.
I think the main problem has really been the business wherewithal of Microsoft to want to create such a device.
And even here, as we see, it's really a partnership.
I mean, it's really sort of a handheld gaming PC that's been licensed by Microsoft to have the Xbox app natively installed.
Now, it's pretty pricey.
There's one thing people are saying is yes, it's good, but you are talking about hundreds of dollars per unit.
Will people pay that?
Well, this gets asked every console cycle and gets asked a lot about games in general.
And it seems to be the case that if the games are there, people will pay to get the box to play them on.
The real question is if you can play a game on several different boxes, are you going to pay a lot of money to get it on a specific box?
And I think the handheld form factor probably aids in that.
And I mean it might be a bit soon to say because we've only really just seen it, but how does this handheld console stack up against a PlayStation and Nintendo, the other things in the market?
Well, I mean, obviously, as an Xbox, it's clearly superior in my view.
But, you know, initial reports are that it's quite powerful, that the experience is quite good.
It's not too heavy.
It doesn't get too hot.
And it seems as if Asus has really produced a nice device.
OK.
And from a business point of view.
Another thing that's going on right now I just happen to know from my own household is that Microsoft are really jacking up the cost of all the subscriptions that go with having an Xbox.
Are they doing that to kind of like balance the money up?
Or what's going on with the business model of all this?
Well, something has to pay for all that AI investment, right?
Now I think that really, the idea of how much to charge for a game and how to combine that pricing model into the larger Microsoft pricing model for its software offerings is something that the company really struggles with.
And if I think back to young Seamus in 2000 lobbying Bill Gates and Steve Ballmer to make this video game console and having them yell at me quite a bit, Their main concern was that they would lose all this money because who knows if anyone's going to buy games.
And it's a very insecure thing for Microsoft, who are used to having the operating system which is a relatively safe kind of landing spot for software.
So it's risky.
And I think they're playing around with the pricing models to see how far they can go.
And this is true of Nintendo as well and PlayStation.
Yeah, I'm feeling sorry now for young Seamus being shouted at all those years ago.
Thank you very much indeed for being with us.
I really appreciate your hot take review of the new Xbox console.
Thank you for being with us on World Business Report.
There's more about today's global stories at bbc.com slash news.
From me, Andrew Peach, and the team, thank you for listening.
