ADM to cut jobs in Shanghai after halting its domestic trade in China

Global grain merchant Archer-Daniels-Midland has begun shutting down domestic trading operations in China and laying off staff within its largest business segment as part of a global cost-cutting push, the company said in an emailed statement on Monday.

The company stated that the move was intended to help ADM, the grains trading giant embroiled in a scandal over accounting since last year "remain flexible in a challenging climate."

ADM's earnings are declining due to the slumping of crop prices, reduced consumer demand from inflation and low crop processing margins. Operating profit in ADM's large Agricultural Services and Oilseeds division (AS&O), which is its largest division, was down by 40% last year.

ADM is facing new challenges as a result of the rising trade tensions between Washington, D.C. and Beijing. ADM relies heavily on the trade between the United States, the world's largest exporter of farm products, and China, its top importer.

ADM stated that the phase-out of domestic trade at Toepfer Shanghai, ADM's Shanghai subsidiary, is expected to be completed by September 30, adding that ADM's other operations in Shanghai will not be affected.

The company has not disclosed the number of layoffs. However, a source with knowledge of the situation said that job cuts will affect 40 to 50 staff, leaving around 10 in Shanghai's financial hub.

One source said that the entire Ag Services and Oilseeds Team in China had been essentially let go. This is ADM's biggest business segment.

ADM started layoffs in Feburary as part of an overall cost-cutting effort to save $500 to $700 millions over the next 3 to 5 years. The company's fourth-quarter profit was the lowest in six years.

(source: Reuters)