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Friday, 11 April 2014

The Dutch economy is growing and it is just a matter of time before the labour market starts to grow again, isn’t it?! In that case, please don’t mind the mass lay-offs at a number of Dutch companies

Since the beginning of this year, a new optimism has come over The Netherlands. There has been some cautious growth in the economy and the prices on the Dutch housing market started to rise… a little. The general outlook is that the crisis is well past its peak.

From now on, the financial industry, the large corporations and the exporting companies will lead the way towards economic growth, before the rest of society does. After these frontrunners, the larger, domestically active companies and the SME (small and medium enterprise) business will follow. 

All these companies are trailed on the path to growth by flexible labour and freelance jobs first and then by general employment. Wage increases for the freelancers and workers with fixed contracts will come last, according to many pundits.

I must admit that the bear in my website’s logo yet stands closer to me than the bull. Of course I can be very wrong with this bearish feeling. In that case the Dutch economy has indeed pivoted towards growth at the end of 2013.

For me, however, this aforementioned optimistic scenario of accelerating economic growth in The Netherlands is still hard to believe, as a number of signals from the market still tend to point in the other direction. For instance, two of the most important ‘ingredients’ to enable this growth, namely optimistical, spending consumers and successful SME-companies and retailers, are yet missing in this development.

And last, but not least: during the last few weeks, there have been quite a few mass lay-offs in renowned companies, like Philip Morris and TNT Express. Reasons for these lay offs were migrated production facilities, defaults companies and spending cuts.

Here is an anthology of recent news from Het Financieele Dagblad and NRC, with respect to the recent wave of mass lay offs.

Almost all jobs will vanish at the Philip Morris production plant in Bergen op Zoom, as 1230 of the 1370 full time equivalents (FTE’s) have been scrapped. This news has been confirmed by chairman Reinier Castelein of labour Union De Unie, last Friday April 4. That Friday, the company informed the Employees Council, the labour unions and the personnel about these mass lay-offs.

The multinational cigarette manufacturer moves the majority of its Dutch production to countries like Greece and Portugal. The plant in Bergen op Zoom will be closed. Only the office clerks remain working there.

And that was not all. The province of Brabant feared that many more jobs on top of the 1230 would vanish, as suppliers of Philip Morris would lose an extremely important client too.

The province of Brabant and the municipality of Bergen op Zoom fear that the aggregate job loss, as a consequence of the closed Philip Morris plant, could reach up to 3000 FTE’s. The province of Brabant delegate Bert Pauli (VVD) for Economic Affairs and Governance stated in a written statement that 2500 jobs in the region could disappear.

The municipality of Bergen op Zoom settles for even higher numbers. At a press conference, alderman Arjan van der Weegen of Social Affairs and Welfare stated that the job loss could reach as much as 3000 to 4000 jobs, suppliers included.

It is hard to say whether these estimates by Brabant and especially Bergen op Zoom are too pessimistic or not. Nevertheless, there is no doubt whatsoever that the departure of such an important employer will lead to the loss of many more jobs in the region.

"Good" news was, however, that there is one part of Philip Morris, which won’t leave The Netherlands. That is the fiscal headquarters of the company. The NRC newspaper:

The cabinet is required to give disclosure, with respect to the news that cigarette manufacturer Philip Morris will maintain its fiscal headquarters in The Netherlands for tax reasons. This in spite of the fact that the Dutch cigarette plant in Bergen op Zoom has been closed now. That is what GroenLinks MP Jesse Klaver desires.

According to Klaver, Philip Morris should no longer be allowed to reap the harvest from the Dutch tax benefits. “Companies which bring employment are of course welcome, but a company which closes its plants here, should not longer be allowed to profit from our favourable tax regulations”.

Of course you could say that Jesse Klaver’s opinion here is somewhat populistic, but it contains an inevitable logic, which is hard to ignore. It is indeed very tough for former employees of Philip Morris to cope with the fact that they lost their jobs, but Philip Morris didn’t lose its Dutch tax benefits.

To be frank, in my opinion the whole status of The Netherlands as a tax haven for multinationals is ready for a thorough revision. The Netherlands hardly gains from these favourable tax policies, while many countries lose desperately needed tax money, which is actually rightfully theirs.

Unfortunately, Philip Morris was not the only company that put jobs on the line recently.

TNT Express: up to 130 jobs disappear. 

TNT Express is going to outsource the activities of its chauffeurs; a reorganization which could cost up to 130 jobs. This Friday (April 4), the international parcel service informed its personnel.

TNT Express stated that it wants to outsource the activities of its chauffeurs to parties with whom the company already cooperates nowadays. This change should make the operation of TNT Express more flexible and it should reduce expenses, according to the company in a written statement. Five smaller storages will be closed, while a substantial share of the work at five main depots will be outsourced too.

TNT Express is planning to scrap 4000 jobs in the coming years, in order to cut €240 million in expenses. Goal is to enhance the operational margin for Europe to 8% in 2015.

With its new strategy, TNT Express is aiming almost exclusively at the very competitive European market. This is the reason that TNT Express wants to make use of subcontractors, which are cheaper than their own personnel in some cases. TNT Express employs 2300 workers in The Netherlands.

This is another chapter in the story, which is called: ‘The race to the bottom in The Netherlands’. In order to make these lower prices possible for TNT Express, the aforementioned subcontractors will use every trick in the book to push their Dutch or foreign workers to the limit, while at the same time reducing their salaries and/or fees. Suffice it to say that this is not a bullish development.

Sas Glas in the province of Zeeland will close its doors in a few months. As a consequence of this closure, 89 workers will lose their jobs. Labour unions FNV and CNV will organize a meeting on Monday, April 7. The company itself will talk with these unions about a social plan for the laid off personnel. Sas Glas is part of the French multinational Saint-Gobain.

Although this short article didn’t add more information, the reason for this closure is probably that the production will be migrated to countries with lower costs of production and labour. This is a sad development for the almost 100 people, who lose their jobs now.

Peters Shipyards in Kampen became bankrupt. More than 100 workers lost their jobs. Last Wednesday, April 2, these workers had already been sent home. 

Today, April 8, the district court declared the company bankrupt. The reason for this bankruptcy is said to be a half finished ship, which lays idle at the shipyard, as the principal allegedly has to deal with serious payment difficulties.

Although the crisis is said to be over, this is definitely not the case for these 100 workers of Peters Shipyard.

And last, but not least, the indispensable newspaper Het Financieele Dagblad mentioned a list of more than 25 Netherlands-based companies and plants, which moved parts of their production facilities abroad in 2013 and more recently.

Among those companies are:
  • Vangrailfabriek Dokkum ( i.e. guardrail factory Dokkum)
  • Luxaflex sun guard systems
  • Avery Dennison labels
  • Inalfa, a manufacturer of sun roofs for cars
  • Tetra Moerdijk, a packaging company for the dairy industry.
  • Akzo Nobel, a paints, lacquers and small chemicals company.

The total estimated job loss of the 20-odd companies in the article alone, is already more than 2000 jobs. 

I have little reason to believe that this will be all when it comes to mass lay offs in 2014. Then the question remains: when the Dutch economy has started to grow again in 2014 and the circumstances on the Dutch labour markets will indeed improve soon, why did so many people then lose their jobs these days?!

It is, of course, a rhetorical question, but  a very important one.

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