Increased Productivity will Lead to Job Cuts, says Report

A new report published by industry analysts, Plimsoll Publishing, identifies 22 companies whose efficiency could have an impact on the rest of the industry. The report suggests that in order to compete other companies will have to cut as many as 1100 jobs in the next 12 months.

According to the report, these 22 companies are delivering 63 per cent more sales and three times more profit than the average tyre manufacturer and distribution company. The companies are said to be typically generating £361,000 sales per person and £11,000 profit per person. Which compares positively with what the publishers quote the general average – £222,000 sales £3000 profit per employee.

In addition 17 companies are identified as only generating an average of £111,000 per employee, and it is these companies that are most likely to shed up to 1100 jobs in order to compensate, say the analysts.

“As I see it, it is very easy to fall for the ‘we need more people’ screams from your staff. You have to watch this. It is vital to keep your sales per employee ratio and perhaps more importantly your percentage of sales used for salaries under control,” commented David Pattison, senior analyst at Plimsoll Publishing.

Explaining why he sees job losses coming over the next 12 months he added: “Essentially there are two reasons. For five of them it’s a question of pure survival, as each one is currently under severe financial pressure. 12 on the other hand are fundamentally well run companies with only low productivity letting them down. Directors of these companies must act now to improve employee efficiency and catch up with the leaders.”