Up to 1,700 staff at Rentokil’s Linen and Workwear division in the UK are set to lose their jobs after the pest control-to-hygiene firm said it would close down the loss-making business having failed to find a buyer.
The division, which operates as part of Initial Hygiene UK, has sites in Catford, south London, as well as Lowestoft, Suffolk and Nottingham, and employs a total of 2,000 staff.
Rentokil said today that it had begun a “full consultative process” with both those employees and customers affected by the closure.
Rentokil’s largest site is in Catford, where Initial Hygiene employs 221 workers.
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Rentokil, which is in the throes of a tranformation process under new chief executive Doug Flynn, said it was formalising the closure today having originally stated its plan to exit Linen and Worker in November 2004.
“The UK Linen and Workwear business has been significantly underinvested, is based on an inefficient distribution structure and historically has pursued a flawed commercial strategy,” Rentokil said.
Operating losses at the business increased to about £9 million last year from £5 million the previous year on turnover broadly unchanged at £55 million.
“Our UK Linen and Workwear activities have sustained considerable losses for several years and the need to exit this operation has been clear for some time,” Mr Flynn said.
“It is always a difficult decision to close an operation, especially one that employs so many people. We are committed to doing all we can to minimise the level of redundancies and to support all our employees and customers affected by the closure.”
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Unions placed the blame for the job losses firmly with Rentokil.
Paul Kenny, GMB acting general secretary of the GMB, said: “This is devastating news for everyone concerned. GMB is expecting the very best package of redundancy measures for anyone targeted for redundancy as a result of the company’s own admission of a ‘flawed commercial strategy’ leading to this situation.
“Any redundancies must look for volunteers first and redeployment to other areas where possible.”
Mr Flynn, who only joined Rentokil last April and immediately fought off an eventually aborted takeover attempt from Irish business entrepreneur Sir Gerry Robinson, said the company would be concentrating on its washroom and dustmat business in the UK.
Having successfully seen off Sir Gerry, Mr Flynn set about introducing a raft of changes, including selling off its conferencing business last November for £325 milion and - controversially - shutting off its final salary pension scheme to new members.
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And just yesterday, Rentokil unveiled an £80.1 million acquisition of independent American pest control firm JC Erlich, the fourth largest company of its kind in the United States.
Mr Flynn said today’s closures will not affect the linen and workwear’s operations in continental Europe, where Rentokil has a number of profitable and growing businesses.
“In the UK our focus is now on delivering the opportunity we have in washrooms and dustmats by improving efficiency and service to our customers,” he said.
Rentokil said closing Linen and Workwear rather than selling it would mean associated costs would now rise to £45 million to £50 million.
The shares were trading 2.5p higher at 158p early this afternoon, valuing the group at more than £2.8 billion.
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