Gillette deal highlights UK job losses

PROCTER & Gamble's £31bn overnight bid for Gillette has sparked fears of hefty job losses in the company's UK workforce. It has also highlighted the extent of manufacturing sector job losses over the past six months.

P&G is likely to cut some 6,000 jobs as a result of the tie-up, some 4% of the two companies' 140,000-strong workforce.

There is no immediate news on the fate of Gillette's UK workforce but with some £8bn worth of savings likely to come through economies of scale and internal reorganisation, job losses could be sizeable. Gillette has three factories in the UK.

The announcement from P&G comes just days after official figures showed UK manufacturing heading for recession after the expected rebound in output in November failed to materialise. Output dropped unexpectedly in November by 0.1%, compared with analysts' forecasts of a 0.3% improvement.

The Office for National Statistics said that manufacturing output, which accounts for just over 17% of the UK's overall gross domestic product, has fallen for the last five months, suggesting the sector is likely to prove a drag on the economy in the fourth quarter.

Economists already believe that Gordon Brown could have to raise as much as £11bn in new taxes if he is to fund his ambitious public sector spending plans ? and a big drop in unemployment could increase pressure on the Chancellor still further.

Defence giant BAE Systems yesterday confirmed that it is to cut almost 1,400 staff in the UK. The company blamed falling orders and said that the cuts will hit four of its businesses, mainly in defence electronics. Sites affected include Edinburgh, Rochester in Kent, Chadderton near Manchester, Luton in Bedfordshire, Southampton, Hants and Basildon in Essex.

Earlier this week Deutsche Telekom announced plans to cut 2,200 jobs at its mobile phones subsidiary T-Mobile. The precise impact on the group's UK workforce was not spelled out but analysts believe that as many as 650 jobs will go in Britain with a further 3,500 affected by a fresh round of savings.

Some 3,500 workers based at the company's headquarters in Hatfield, Herts, have already been told of a 'save for growth' programme under which the company will need to reshape its business rather than chase customer growth. T-Mobile employs a further 3,000 in call centres.

And financial services companies are moving substantial numbers of posts to India as part of a search for a lower-cost base. Lloyds TSB announced in November that it is to move a further 1,000 jobs to Bangalore and Mumbai in 2005 on top of some 1,500 that have already gone. Unions fear that 10,000 jobs will be sent abroad by Lloyds TSB to save money.

Royal & Sun Alliance and HSBC are moving some 4,500 jobs to India. HSBC said last year it is to cut 3,500 UK jobs to reduce costs, including a wave of moves to low-cost Asian countries while Royal & Sun Alliance is to move about 1,000 jobs to India.