Already on April 26
of 2011, I noticed a trend towards mass lay-offs in The Netherlands in my
article Three
recent trends in The Netherlands:
It could be that these job cuts are the beginning of a
more serious trend towards less employment. I wrote a number of columns
mentioning the Part time Unemployment Benefit (PUB). This was a 50% government
subsidy on salaries for companies to keep people employed that had too little
work. In this way the companies could keep experienced personnel on the payroll
until better days arrived.
What I had against this PUB is that companies that
made use of it, missed the chance to become ‘lean and mean’ again. They
gathered their personnel in the 2000’s:
while there was a situation of excess consumption in the USA and Europe,
this also caused excess production. This excess consumption came to a sudden
halt in the year 2008 in Europe and it is improbable that this excess
consumption will return within a few years.
By keeping your personnel at an excess level, you run the risk of
returning to red marks as soon as the economy chokes again.
Since then the
number of mass lay-offs has only been increasing, as I described in a number of
articles:
- Companies have worries on the economy…
- Bearish news from The Netherlands:
- ING Group NV is cutting 2700 jobs in The Netherlands
Today there was
news concerning mass lay-offs in the banking industry. According to Reuters, a
mindboggling number of 133,500 employees in the banking industry has already been
laid off or will be laid off shortly.
And while the lay-offs
at the Dutch banks Rabobank, ABN Amro and ING
Groep NV (IDG.N) were already mentioned in my previous blogs,
other banks are also taking desperate measures to improve their capitalization
and reduce costs. The following list comes from an
article in the India Times and is based on a list put together by the
Reuters press agency.
 |
| List of mass lay-off among the largest banks of the world www.indiatimes.com Click to enlarge |
Reuters itself
writes a story on the lay-offs at the British system bank Royal Bank of Scotland Group PLC (RBS). Here are the pertinent
snips:
Royal Bank of Scotland abandoned ambitions to be a top
global investment bank and said it would cut another 4,450 jobs as it bows to
pressure from the UK government to shut down risky operations and prepare for
tougher international regulations.
Britain owns 83 percent of Britain's fifth biggest
bank after pumping in 46 billion pounds to keep it from going under during the
financial crisis and the country's taxpayers are currently sitting on a 24
billion pound loss.
The government has demanded that RBS shrink its
investment bank further, despite the bank already halving that part of its
business over the last three years.
RBS will now stop trading shares and advising
companies on takeovers, both loss-making businesses, in arguably the starkest
retreat by a big investment bank as the financial crisis and tough new rules
hit profits across the industry.
RBS said it is cutting 3,500 jobs in its investment
bank and will exit cash equities, corporate broking, equity capital markets and
mergers and acquisitions businesses. The cuts come on top of 2,000 at the investment
bank in the second half of 2011 and account for more than a quarter of the
unit's staff.
In total the bank has cut 34,000 jobs since Chief
Executive Stephen Hester was brought in to turn the bank around when it was
bailed out in 2008. The Unite trade union said that 22,000 of those jobs were
in the UK alone.
But a massive loss
of jobs was not exclusively for the banking business today. Also in the retail
industry there was bad news from the British supermarket chain Tesco PLC (TSCO.L) and its Belgian
counterpart Delhaize (DELB.BR). Again Reuters:
Tesco, Britain's biggest retailer, reported its worst
Christmas sales performance for decades on Thursday and warned it would see
minimal profit growth next year as it invests in winning back shoppers.
The world's third-largest stores group said on
Thursday it now expected minimal trading profit growth for 2012/13 against
analysts' forecasts for a 10 percent increase. It will cut back large store
openings, while investing in the internet.
The supermarket group, which makes about 70 percent of
operating profit in Britain, said sales at UK stores open over a year fell 2.3
percent excluding fuel and VAT sales tax in the six weeks to Jan. 7.
"We are disappointed with our seasonal trading
performance in the UK," Chief Executive Philip Clarke said.
"In a challenging consumer environment at home,
and with early signs of more cautious behaviour emerging elsewhere, we have
seen more strain than anticipated on our profitability during the important
seasonal trading period."
Tesco didn’t
announce yet that jobs will disappear in the coming months, but if you read
between the lines (‘It will cut back large store openings, while investing in
the internet’), it makes sense that jobs in the bricks-and-mortar stores are
on the line.
However, a supermarket
chain that did state that jobs will disappear at short notice, is Brussels, Belgium based Delhaize:
Belgian supermarket group Delhaize (DELB.BR) plans to
cut 5,000 jobs after fourth-quarter sales fell just short of expectations in
its key United States and Belgium markets, due to the weak consumer sentiment
and price competition.
Delhaize, which makes about 65 percent of its revenue
in the United States, said on Thursday it would cut close 113 underperforming
stores there and a further 20 convenience stores and supermarkets in Bulgaria,
Serbia and Bosnia & Herzegovina.
Delhaize America, which has more than 1,600 stores in
16 states in the eastern United States, also operates under the banners Bottom
Dollar Food, Harveys, Hannaford Supermarkets, Reid's and Sweetbay.
All affected stores will close within 30 days and
store conversions will begin immediately, the company said.
The company said that fourth-quarter revenue rose by
7.0 percent at identical exchange rates to 5.64 billion euros ($7.16 billion),
below the average 5.68 billion euros expected in a Reuters poll of 11 brokers.
Also in The
Netherlands – my home country – there was bad news concerning cutbacks and future
job losses at various companies.
The Dutch financial
newspaper Het Financieele Dagblad (www.fd.nl)
writes on Dutch publisher Wegener,
an 86% investment of the British company
Lower
results force Wegener towards lay-offs (link in Dutch)
Dutch publisher Koninklijke Weger foresees a round of
job cuts later this year. The company also assesses the possibility for further
austerity measures.
These measures are the consequence of lagging company
results over 2011. This is stated by the company in a trade update, without
mentioning concrete plans. Last year Wegener saw its gross result decline to
€60 mln from €62.3 mln, a drop of 3.7%. Sales dropped with 3%, according to the
company and is now set at about €508 mln. Wegener’s 2010 sales was still €523,6
mln.
A transformation process of the company ‘towards a new
organization’ didn’t yield the demanded results. Therefore a ‘structural
decrease of personnel numbers’ was inevitable.
Reuters writes on
the French-Dutch aviation company Air
France KLM SA (AFRAF.PK) planning massive cutbacks to the tune of €2 bln
and (perhaps) future job losses.
Air France-KLM announced a pay freeze for French staff
and cutbacks in its fleet as part of a three-year plan to end financial rot at
Europe's largest airline by revenues.
The Franco-Dutch group pledged to cut debt by 2
billion euros ($2.56 billion) by end-2014 and said it would shrink its fleet by
shedding more than a billion euros from a planned expansion project.
The plan will also involve a combination of immediate
and longer-term cost reduction measures, Air France-KLM said in a statement on
Thursday.
"We needed to take these measures because our
debt position and costs per unit were running too high, and because of losses
on our domestic and European routes ... We do this to avoid getting into
trouble later," said Peter Hartman, chief executive of KLM, the group's
Dutch subsidiary.
Shares in the group rose over 7 percent earlier as
investors bet on firm action from Jean-Cyril Spinetta, restored as chief
executive in addition to his role as chairman last November, following months
of underperformance compared to its rivals.
Unions are expected to hit back at the plan which
calls for a general pay freeze at Air France during 2012 and 2013 combined with
"wage moderation" at the Dutch sister airline KLM.
The measures are part of a 1 billion euro package of
immediate cost cuts that also include a continued hiring freeze.
In a spoken
statement on the Dutch Business News Radio (www.bnr.nl)
chairman Peter Hartman of KLM stated that job losses for the time being will be
reduced to temporary personnel from external agencies, whose jobs won’t
continue in the coming months. But you may expect AF/KLM to also cut in their
own personnel numbers, directly after the French elections.
It promises to be a
cruel, cruel
summer in the coming months of 2012.
Update 13 January 2011
Already today the Dutch publisher Wegener presented the exact impact of its planned job cuts for 2012. The company wants to lay-off a maximum of 10% of its personnel. According to the Dutch newspaper De Stentor ´the range of job cuts lies between 200 and 280 jobs'.
No comments:
Post a Comment