ABOUT 1,100 British jobs are to be lost at Royal & SunAlliance (R&SA), the insurer, and Alba, the television maker, after the two companies announced plans yesterday to cut a tenth of their UK workforces in an effort to cut costs.
R&SA said that it would cut 1,550 jobs, including 1,000 in the UK, as part of a programme to reduce costs by £130 million by mid-2008. The savings, which represent about 9 per cent of the insurer’s 2005 cost base, would cost about £100 million, R&SA said, but would be funded by the expected cost cuts over the next two years and would not knock profits.
Alba, the company behind Goodmans music systems and Dirt Devil vacuum cleaners, announced plans to cut about 100 full-time jobs in the UK within a year, from a total British workforce of up to 800. The cuts came after the group, which also unveiled a significant management restructure yesterday, reported a 90 per cent fall in annual profits to £2.4 million. Shares in the company edged 0.4 per cent higher to 241p.
The job cuts are only the latest in a string of announcements from companies shedding workers in Europe in an effort to reduce costs.
A fortnight ago, Heinz, the food group, said that it would dismisses up to 600 staff in Europe. The company is in negotiations over plans to move the production of HP Sauce from Birmingham to the Netherlands.
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AXA, the insurer, said last week that workers in Britain may lose their jobs after the company’s acquisition last week of Winterthur Life from Credit Suisse.
The job cuts at R&SA, announced just a month after the insurer reported a 29 per cent jump in first-quarter profit to £207 million, comprise nearly 7 per cent of the insurer’s 23,000 global staff.
Andy Haste, the chief executive, said: “The decision to reduce head-count is always a difficult one but necessary to ensure we remain as competitive as possible.”
The company also announced new growth targets for the UK, Scandinavia and the remainder of its international business. It aims to cut expense ratios to less than 15 per cent in the UK and Scandinavia.
R&SA also said that it had agreed to buy the personal lines business of Shilling Insurance Brokers, adding about £20 million-worth of premiums to its Canadian unit.
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Investors welcomed the news, sending shares in R&SA up by 2.9 per cent.