New wave of job losses slash across Europe
Pastor Dale Morgan
New wave of job losses slash across Europe*
• Philips reveals Q1 loss and warns of further restructuring
• Reports claim 10,000 more jobs will go at UBS
• German arm of Woolworths collapses
* David Gow in Brussels
* guardian.co.uk, Tuesday 14 April 2009 14.29 BST
Mainland Europe is bracing itself for thousands more job cuts as Philips
warned of further restructuring to staunch mounting losses and the
German arm of Woolworths filed for bankruptcy.
In Switzerland the country's biggest bank, UBS, is reportedly planning
to axe up to 10,000 more jobs as early as next week as it struggles to
regain profitability – and credibility.
And as ArcelorMittal, the world's biggest steelmaker, confirmed it would
cut output by half and mothball several plants, unions urged the group
to retain the current workforce in readiness for any upturn.
Dutch group Philips, one of the earliest continental firms to report
first-quarter earnings, said it had already axed 5,216 jobs this year
and the number of its employees had fallen by 18,030 in a year, with
5,600 due to discontinued operations.
Warning that demand in the current quarter would be weak after slumping
more than expected in the first three months, the world's biggest
lighting business and Europe's biggest consumer electronics firm said:
"Consequently, we will accelerate measures to further lower our fixed
cost base."
According to Gerard Kleisterlee, Philips's chief executive, the group
now expects to realise annual cost savings of €500m (£445m) by the end
of this year compared with original plans to save €400m.
Pierre-Jean Sivignon, the group's chief financial officer, told
reporters there were no immediate plans to announce more job cuts on top
of the 6,000 set to go this year. But he failed to rule out more
redundancies at a firm now employing 116,000 globally.
Reporting a 17% drop in sales to €5.1bn as the recession deepens,
Philips said it had swung to an operating loss of €74m in the first
quarter – a decline of €339m on a year ago when it made €265m.
Kleisterlee said there had been a significant further deterioration of
markets. "While the effects were felt most strongly in our activities
that cater to the consumer market and to the construction and automotive
industries, our healthcare sales are now impacted as well. We expect no
material change to this situation in Q2," he warned.
Healthcare sales fell 2%, notably because of lower demand in the US, but
the biggest declines were in consumer lifestyle (down 25%) and lighting
(down 19%). Sales of TVs and audio-visual multimedia slumped by a third.
In November, the UK arm of Woolworths went bust and today it emerged
that the German arm had followed suit, putting at risk around 11,000
jobs after filing for insolvency on Saturday.
The German business, bought by British investor Argyll Partners from
private equity firm Electra at the end of 2007, has 323 shops, of which
US investor Cerberus owns around a third of the buildings.
Founded in 1926, the retail chain turned over about €900m last year and
brought in a former Lidl manager, Stefan Rohrer, to run the business in
March. He quit, after just four weeks, at the start of this month.
Frankfurt's district court said it had appointed Ottmar Hermann as
administrator – just days after he took on the same role at the
venerable car-parts supplier and designer Karmann.
Meanwhile, UBS staff, already facing 11,000 job cuts this year to bring
the workforce down to around 75,000, fear more are on the way after the
troubled bank shed 240 posts in the Asia-Pacific.
Analysts said between 5,000 and 10,000 more jobs are at risk, with Swiss
media reporting that a worst-case scenario could become reality as soon
as 22 April. "It's inevitable. [Oswald] Grübel [the new CEO] has made
that clear from the day he started," said Peter Thorne at Swiss broking
house Helvea.
The European Metalworkers' Federation, stunned by new European
production cuts at ArcelorMittal's continental plants, urged the group
to avoid compulsory redundancies and to use the recession to invest in
retraining and renovation.