Danish Crown Faces Huge Job Cuts

Balancing costs and budget Danish Crown have stated that the cuts come as Balanace part of an attempt to bring their costs back into line with their budget. 150 jobs were lost in the UK last November, when Tulip sites were closed down, with a further 109 having been cut back in June. This is all part of an initiative from the company to shave off £25.75 million from their annual running costs (DKK 200m in their original currency).

The new plans to cut jobs across the group will help to save a total of £41 million, meaning their targets will be met and then some. However, commentators will wonder whether this is enough, given the company’s seeming urgency to make as much of a saving as possible.

Danish Crown has not yet been able to confirm how many jobs in the UK will be cut as part of the latest round of culling. It’s clear that there will be a lot more competition for the kind of processing jobs you can see here.

Action planA spokesperson said that the plans were still “being considered and would be subject to appropriate employee consultation”. Chief Executive of Danish Crown, Jais Valeur, said that there was a “fundamental challenge” posed by the fact that costs in their native Denmark are much higher than those in the other countries that it competes in.

Competition and market problems

At least part of the company’s current struggle can be blamed on their trade in the UK, which Valeur had previously said made their profits “badly affected” thanks to market issues. He now says that “things are moving in the right direction”, though remains serious about the fact that even the important contract wins they have racked up are not yet a solution to the problem.

“However, this does not change the fact that our costs are still too high, so further reductions are being considered as part of a comprehensive programme to improve operational efficiencies at Tulip,” he said. “We’re implementing measures now to keep us on track to achieve the budgeted profit for the year. Unfortunately, this means that we’re having to cut between 300 and 400 jobs across the group. We’re maintaining the hiring freeze initiated in November 2018, as well as a freeze on the use of consultants for the time being and, while investment in the business continues, we are in the process of identifying projects that could be postponed.”

There is also “fierce competition” in the Danish retail sector, according to Valeur. Their largest business area is Danish Crown Pork, which has not been living up to forecasts and expectations as far as earnings are concerned – which cannot be helpful for their overall fortunes. There are 29,000 Danish Crown employees across the world – but the 7,000 of them living in the UK may want to consider looking for jobs here.

tug of war

“Right now, we don’t have the competitiveness that we’re striving to achieve compared to the EU index,” Valeur added. “This is primarily due to the particular challenges we’re facing in the UK – but the tough battle for pigs in Germany, and the advance of the Spanish abattoirs is not helping either. At the same time, we are faced with the fundamental challenge that costs in Denmark are significantly higher than in the countries we compete with. Therefore, all parts of our business must deliver to ensure competitive prices for our owners.”

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