Consignia slashes jobs

25 March 2002 - Consignia has announced the following:

Restructuring of loss making parcels business
* Rationalisation of transport operations to create more efficient single network
* Combined cost saving of £460 million
* Further management, support service and operational savings identified
* 15,000 jobs to go, 13,000 through redeployment or redundancy

Consignia will restructure Parcelforce Worldwide, its loss making parcels and express business an reorganisw its internal logistics and transport networks as what is described as ' the first moves in a three year renewal programme to cut costs by more than £1.2 billion and provide a secure long term foundation for the company and for universal postal services in the UK.'

Consignia Chairman Allan Leighton said, "Consignia is in a perilous position - losing more than £1.5 million every day. Parcelforce Worldwide is losing £15 million per month as we have failed to reduce our costs fast enough as business has declined. We need to renew our operations and halt the financial losses which put key services at risk. Both measures announced today are far reaching - but they are just the start, not the end. They will ensure that real progress is made in the first year of a three year strategy to restore profitability, deliver positive cash flow, improve services and make the business a better place in which to work."

As of July Parcelforce Worldwide will only deal with its time-guaranteed and next day and two day express deliveries. The remaining 'universal parcel service' will be transferred to Royal Mail. 5 parcel distribution centres handling Three Day plus deliveries will close (Liverpool, Leeds, East London, Glasgow and Reading) and the number of Parcelforce Worldwide depots will be cut from 101 to 51.

The following depots will close: Ayrshire, Barnstaple, Basingstoke, Belfast North, Birmingham North, Blackburn, Blackpool, Bolton, Bradford North, Bridgwater, Bury St Edmunds, Canterbury, Dartford, Derby, Dundee, Glasgow West, Grimsby, Hastings, Hereford, Hull, Kings Lynn, Lancaster, Leicester Central, Leicester North, Liverpool North, Londonderry, London East, London South West, Luton, Northampton, Norwich North, Oldham, Peterborough, Perivale, Pontypridd, Portadown, Portsmouth, Rotherham West, St Albans, Scarborough, Scunthorpe, Shoreham, Southend, South Tyneside, Spalding, Swindon, Wirral, Woking, Wolverhampton, Wrexham.

Parcelforce Worldwide' workforce of 11,700 people will be reduced by around 6,700, over and above natural turnover. Up to 900 'will have the opportunity to work with Parcelforce Worldwide as owner-drivers in line with agreements reached with the trade unions.' Other people whose jobs will disappear are to be given a choice between:

- employment elsewhere in the Group,
- a job in the new Parcelforce Worldwide, or
- a voluntary redundancy package.

Union consultations have begun.

"Parcelforce Worldwide has been out of step with the marketplace and its business model does not work. Most of our costs - and losses - are tied up in keeping an infrastructure for non time-guaranteed services which customers are moving away from and which we cannot make profitable. In contrast we see real potential in the express marketplace where we've grown our next-day revenue by 5.5% in the past 18 months. It's clear that this is where a successful future lies, and where the best possible prospects for our remaining employees will be found", Mr Leighton said.

The business will rationalise its road and rail transport.and cut see four of the 16 current mail distribution centres this year. Mail sorting on trains will cease. According to Allan Leighton: "This is the sort of common sense re-engineering which customers and Consignia need - we are able to reduce costs at the same time as we make improvements to the way in which the different bits of the organisation fit together. A single integrated network means letters being carried efficiently and reliably, making the vital connection points which help us to get more letters delivered on target."

"Radical surgery is required both to our parcels strategy and to our internal transport infrastructure. Both have developed in a piecemeal fashion, and have lost sight of market and network logic. These programmes, together with other savings to our management, operations and support services, mean that around 15,000 jobs will go over the next three years including anticipated natural turnover of around 2,000 people", said Mr Leighton. "We have more work to do and more announcements regarding other parts of Consignia will be made as we agree detailed plans."

John Roberts, Consignia's Chief Executive, said "We are talking to our people whose jobs are directly affected in face to face meetings throughout today. We are determined to offer as many of them as possible a genuine option to stay with the business, or to take a voluntary package. We are also committed to maintaining our ongoing dialogue with the trade unions. This is a difficult time, but we must build on the promising work led by Lord Sawyer, which has already dramatically reduced unofficial industrial action in Royal Mail and which will see Partnership Boards introduced across the business to help employees and unions to resolve issues jointly. We need to achieve these changes with respect for our people and without disruption to our customers."