THE Co-operative Group is entering into consultations with trade unions representing staff at its Manchester headquarters over the implementation of a major restructuring plan, which will see around 600 jobs go over the next two years.
The Group – which reported a disappointing financial performance during 2004 with sales and profits both down – has carried out a review of its head office functions and costs as part of a programme to drive future business performance.
A statement issued by the Group says the review highlighted opportunities to streamline functions that would save more than £ 50 million each year. However, removing this cost will entail an estimated loss of around 600 head office jobs over the next two years.
"This is deeply regrettable," said Group Chief Executive Martin Beaumont. "But we find ourselves in an unsustainable position. If we are to provide first class products and services to our customer members and security of employment for our staff, we must address all of the underlying problems that are contributing to the current unsatisfactory performance as a business.
"This is not just about cutting costs. Over the years, the Group has evolved into a conglomerate of individual businesses, often with their own significant support structures and overheads, each failing to fully exploit the combined strengths of the Group.
"At head office, this autonomy has sometimes resulted in the duplication of management effort, leading to inefficiency, higher costs and missed opportunities. While we have made some progress in working more closely as a Group, our recent results clearly show we now need to move much faster."
Added Mr Beaumont: "The restructuring process, whilst painful in the short to medium term, will put in place a new streamlined management structure that will enable us to take maximum advantage of our strengths as a family of businesses.
"This process will run in parallel with the action we are already taking to resolve operational difficulties in our food business."
As previously reported in the News, Group sales fell to £ 7.8 billion last year and profits dropped to £ 243.7 million (£ 327.3m).
The Group is to begin its consultation process with representatives of the National Association of Co-operative Officials (NACO) and the Union of Shop Distributive and Allied Workers (USDAW) immediately after the Spring Bank Holiday weekend.
The announcement is the second major restructuring and redundancy programme launched by the Group in a year by the Group as, last July, Co-operative Financial Services said that an estimated 2,000 CIS jobs would disappear by 2006 as a result of plans to modernise the business.