Loss-making Spanish bread and pastry manufacturer Panrico has opted not to pay the wages of its 4,000-strong workforce this month in order to have enough liquidity to meet its liabilities to suppliers, sources in the sector said Tuesday.
The sources said the company is willing to face possible labor conflicts in order to keep the business going. A Panrico spokesman declined to comment.
The drop in consumer spending as a result of the prolonged economic crisis in Spain has undermined the performance of Panrico, which was acquired by US fund Oaktree in June after loans made to the baker last year were capitalized. Panrico’s main challenge is competition from generic brands, whose prices are much lower.
Panrico is drawing up a viability plan to return the company to profits. Last week, Panrico appointed restructuring expert Carlos Gila as first executive. An economist and lawyer, Gila, was previously executive vice president of La Seda Barcelona, and board member of Azucarera Ebro Agrícolas.
Panrico said earlier this month that its new business plan would “need support from employees, suppliers, customers and financial entities, and requires being flexible enough to adapt the company to the hard market conditions.”
Panrico had labor problems last year after threatening to close its Santa Perpètua de Mogoda plant in the Barcelona area. It eventually managed to persuade workers to accept a 25-percent cut in wages. The company carried out job cuts in other plants in Seville, Valladolid and Santiago de Compostela.