Business
The Copenhagen Post cphpost.dk
16 - 22 November 2012
15
“Final call” as SAS cuts 800 jobs Businesses: fat tax was a failure Scanpix / Mads Nissen
Scandinavian airline will look to cut jobs, reduce wages and sell off assets as it seeks to save nearly 3 billion kroner a year
Ray Weaver Levy cost millions and did not result in healthier consumer choices, say food producers
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eleaguered Scandinavian airline SAS has unveiled a last-ditch plan aimed at securing the additional 2.8 billion kroner in revenue the airline needs each year in order to keep flying. Announced on Monday in Stockholm, the plan hinges on employees accepting an average 12 percent wage reduction. Employees will be asked to accept wage and pension reductions, fringe benefit cuts and longer working hours. The plan, which would also consolidate administrative activities at the airline’s head office in Stockholm, is designed to bring the SAS work force down from around 15,000 to 9,000 employees. The aggressive plan is also expected to find savings by trimming away some 6,000 jobs through the sale of subsidiary companies SAS Ground Handling and Widerøe, a regional airline, as well as by discontinuing about 800 administrative jobs. “SAS is facing major and necessary changes,” Rickard Gustafson, SAS’s managing director, said. “[The savings plan] enables us to establish an entirely new platform for SAS’s future. It is a comprehensive plan that places significant demands on the entire organisation, but which is necessary to address the conditions prevailing in the market.” The airline has given employee unions until November 18 to accept the plan. Should they do so, the plan will go into immediate effect. However, by mid-week, it was looking increasingly doubtful that employees would sign off. Lars Bjørking, the head of the pilots’ union Dansk Pilotforening, told Politiken newspaper late
SAS employees like Maria B Nielsen are being asked to make major sacrifices to keep the company afloat
on Tuesday that his union, which represents some 500 Danish SAS pilots, would not accept the deal. “We received a concrete proposal for a new collective bargaining agreement, which we have spent Monday and Tuesday pouring over,” Bjørking said. “We cannot agree to an ultimatum that we don’t know the reality of.” Other SAS employees expressed their dissatisfaction with the savings plan earlier that same day, when members of the 1,400 member-strong Cabin Attendants Union (CAU) refused to take part in a meeting with Gustafson to discuss the main points of the plan directly with employees. CAU members said they were upset that SAS had called on employees to accept the plan through the media, instead of appealing to them in person. The union members met again on Wednesday, however, and agreed to sit down with SAS on Thursday, one day after this newspaper’s deadline, to continue negotiations. CAU officials predicted that those Thursday talks would be “difficult” given the pressure SAS has applied on its members through the media. With CAU’s resistance and Dansk Pilotforening’s refusal to accept the agreement, the airline’s future is very much in doubt. Gustafson has been on record as saying that the offer is not up for
negotiation and that SAS employees have two options: sign the agreement or see the airline shut its doors. In an internal email obtained by Politiken newspaper, Gustafson positioned the savings plan as make or break for the company. “I will be very clear. This plan is crucial for SAS’s survival,” the email read. “If we implement the initiatives we have put forth 100 percent, we have a future. If we say ‘no’ to the plan, SAS will be headed for liquidation.” As part of the plan, company executives will cut their salaries by 20 percent. For Gustafson, that cut amounts to about 1 million kroner per year. “This is our ‘final call’ if SAS is to continue. We have been given this last chance to start from scratch and implement these fundamental changes. I realise that we’re asking much of our employees, but there is no other way,” Gustafson said on Monday. In order to reach its financial goals, SAS has received credit lines in excess of three billion kroner from seven banks and the governments of Denmark, Sweden and Norway, who together own 50 percent of SAS shares. SAS has implemented a number of savings plans in recent years that have resulted in its workforce being cut each year since 2004.
Business news and briefs Vestas continues downward spiral with 3,000 new job cuts With a previous round of 3,700 layoffs not yet finished, Vestas released third quarter figures last week showing that 3,000 more workers will soon be getting pink slips. The company announced that it was seeking to reduce its workforce to 16,000 by the end of 2013. At the end of 2011, the company employed nearly 23,000 people. When all is said and done,
colourbox
Christian Wenande
Vestas will have reduced its workforce by 30 percent. “Vestas is working on an evaluation of its production [and] we expect to reduce the headcount further during 2013 through divestments, hiring freezes and layoffs,” the company wrote in a statement. The new savings plan is expected to cut costs by just over one billion kroner.
Cut waste, win money FDB, the co-operative that runs several of the nation’s supermarkets under the COOP umbrella, asked its customers for suggestions on how to cut down on the estimated 50,000 tonnes of food that are tossed out every year. After receiving more than 2,000 responses, three of them have been selected as finalists for a 30,000 kroner prize.
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enmark’s nowscrapped surcharge on the fat content of foods has cost businesses 200 million kroner since it was implemented last October, according to Dansk Erhverv, a business advocacy group. “The tax has been expensive,” chamber spokesperson Lotte Engbæk Larsen told Jyllands-Posten newspaper. “Businesses have had to absorb the costs of administration, set up new IT systems, and explain it all to customers and suppliers.” Larsen said that the red tape was the only thing to come from the levy, since it did not encourage customers to pick less fatty food. “There have been absolutely no health benefits gained from this tax,” said Ole Linnet Juul of DI Fødevarer, a food industry advocacy group. Arla, the nation’s largest dairy, said Danes were consuming just as much milk, cheese and yoghurt as before; they are just choosing cheaper, and perhaps even less healthy, varieties and the government is actually collecting less money as consumers buy down instead of less. “No-one has gained anything
Industry officials say Danes continued to buy fatty foods like cheese
from this tax, and people aren’t consuming less fat,” said Arla vicepresident Peter Giørtz-Carlsen. Snack-food producer Kim’s, meanwhile, reported its bottom line grew by nearly seven percent last year, in spite of the fat tax making its products more expensive. “I would like to see any research that shows the fat tax works,” said Kim’s managing director Kim Munk. “On the contrary, the market for crisps and snacks is growing.” Under the law, food producers were responsible for calculating the fat content of foods and collecting the levy, but Munk and other business leaders have decried the procedure. “It has been another obstacle to doing business,” he said. Every 100 kroner the state collected from the unpopular tax cost the food industry 10 kroner to administer, and businesses said
that the losses discouraged development and innovation. “The tax has required many man-hours, and in these times of crisis, businesses cannot afford to hire additional staff. The easiest way to cut costs is to cut back on product development,” said Larsen. Larsen said that everybody loses when companies fail to develop new products, because new product development helps stimulate job growth. The fat tax and a similar surcharge on sugar, which was set to come into effect in January, were key negotiating points in the government’s budget talks. With the deal struck with Enhedslisten on Sunday, both levies were scrapped. The lost revenue will be made up by raising the bundskat (bottom tax rate) by 0.19 percent and lowering the personal allowance by 900 kroner. (See related stories, page 5)
BRITISH CHAMBER OF COMMERCE IN DENMARK
A British Company Operating in a Global World Our guest speaker at the November Lunch event will be Denize McGregor, Head of Customer Service and Operations for Europe, Africa, Middle East, UK Regions, Ireland and South America at British Airways since January 2011. She will cover some of the key issues facing companies when their operations span the globe, with experiences and stories from British Airways Denize is responsible for delivering a safe and secure operation, whilst maintaining the highest levels of customer service at more than two thirds of the airports across the British Airways network, dealing with 310 departures a day. Previous roles she has worked in since joining British Airways in 1990 include: Sales Team Manager, Industrial Relations Manager, Head of International HR and Area Customer Services Manager. During her time abroad Denize was responsible for restructuring of the overseas organisation including the introduction of a supplier managed operating model.
Venue 23 November 2012 Radisson Blu Royal Hotel Hammerichsgade 1 1611 Copenhagen
Non-members are very welcome. Please contact BCCD or go to www.bccd.dk for further information.
Price in kroner for one unit of foreign currency
If you would like to attend then please send us an email (event@bccd.dk) or call +45 31 18 75 58
Date: 14 November 2012
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