The phrase “consolidation period” always sounds like a harbinger of doom for workers in any industry, so a new report on the U.K. tyre industry suggesting that this is exactly what lies ahead in the months to come can only suggest the onset of job losses in the sector.
The third annual Plimsoll Analysis, presented this week, suggests that the industry will lose 2,373 jobs, in line with the UK economy’s “prolonged and bumpy landing”, which – a British Chamber of Commerce survey suggests – will see unemployment rise by 300,000. The report individually analyses the U.K.’s leading 200 companies, assessing their chances of survival and possible precautionary measures in the lacklustre market conditions.
Alongside the threat to jobs, the report says that: three quarters of the 200 organisations will need to reduce staff levels; one of the largest companies alone could lose 614 jobs; 25% of companies analysed are running at a loss; and companies should target sales of £177,000 per employee to stay competitive.
Of the 200, 34 need to consolidate now, as they are already losing money, have borrowed heavily and are exposed to their lenders. 83 companies should make small changes to their business to remain stable. The remaining 83 at the head of the market have sales per employee figures of in excess of £227,000, generating £8,000 of profit per employee. These companies, says the report, are likely to profit from the misfortune of competitors.
Plimsoll’s Senior Analyst David Pattison commented on release of the report: “The 34 companies we have identified as in danger need to act now if they are to survive. It very important they review their entire business cost base and take action now to significantly reduce their outgoings. Whilst job losses are undoubtedly bad news for any company, such decisive action may be called for to guarantee the ultimate survival of the business- even if this means the business is 30% or 50% smaller than it was.” (Tyres & Accessories/Staffordshire, U.K.)
