Consignia to axe 40,000 jobs

CONSIGNIA today axed 15,000 jobs in a desperate bid to stem losses of £1.5m a day. The cuts, the first in a series of measures to save £1.2bn, will be part of an estimated 40,000 jobs to go over the next three years.

The company had previously said up to 30,000 jobs would go but today indicated that a further 10,000 will be affected. Today's announcement will see the 220,000 workforce reduced through voluntary redundancies, transfers and 'natural wastage'.

The massively unprofitable Parcelforce delivery arm will bear the brunt of the first round of cuts. More than two-thirds of its 13,000 jobs will go over the next two years - 6,700 through redundancies and a further 2,500 through turnover.

The rest of the cuts, which will produce savings of £460m, will be focused on management and administrative roles and the closure of four mail distribution centres, including ones in east London and Reading. Other likely moves include closing up to 3,000 urban post offices, increasing the price of stamps and ditching the second post for most residential customers.

The Government added that it would forego its annual dividend from the organisation in the current year. Trade and Industry Secretary Patricia Hewitt told the House of Commons the move would save Consignia £64m this year.

The company is also expected to announce it will change its name back to the Royal Mail, only a year after a £2m rebranding exercise aimed at turning it into a major force in the global distribution industry.

Today's announcement also sees a shake-up of its sorting and distribution operations aimed at improving the reliability of first class mail. Second class post and non-critical bulk mail will be shifted to new mail centres to be sorted by day and free up night-time operations for top-priority mail.

Consignia chairman Allan Leighton said the company, which has lost its delivery monopoly, was in a 'perilous position'. A spokesman said: 'The changes we are introducing should improve the reliability of next-day first class delivery where we are struggling.'

London has the worst 10 postal delivery areas in the country, figures out last month revealed. One in five first class post items is late in east London while at least 15% of first class mail is late in the UB, WC, SW, HA, W, N, NW, SE and EN post-code areas.

Consignia hopes the cuts will make it more competitive as PostComm, the industry watchdog, prepares to open up a third of the company's market to private firms. A further third should be opened up in spring 2004 with the entire market open to competition by 2006.

The largest postal workers union threatened strike action if Consignia forced through compulsory redundancies.

Billy Hayes, general secretary of the Communication Workers Union, of which 180,000 members are postal workers, said: 'The job losses being proposed by the Post Office today are directly attributable to under-funding. Jobs can be saved within the industry if a price rise (in stamps) was agreed today. The Government can no longer have the postal service on the cheap. Any attempt by the Post Office or the Government to force through redundancies will be resisted by strike action.'