Kirsty Dorsey: RM chief delivers a stark jobs message

[TrueBlueTerrier]

Kirsty Dorsey: Royal Mail chief delivers a stark jobs message on downsizing

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WHEN Moya Greene first walked through the doors of Royal Mail's impressive headquarters near London's Blackfriars Bridge last summer, she knew she would have to make some radical and difficult changes.

But one decision that has proved popular - with the City's hacks at least - was the return last week of the Royal Mail's traditional year-end press conference.

The last media gathering had been some four years earlier, when Greene's predecessor, Adam Crozier, was still running the show. These popular meetings faded away as Crozier got stuck into his famed modernisation programme that sparked a series of damaging strike actions by Royal Mail workers.

Though no stranger to industrial discord, Greene has so far had the benefit of reasonably positive union relations since taking over last July. But analysts believe this is unlikely to last as the softly spoken Canadian used last week's briefing to push the case for further significant downsizing.

"The next two years will be challenging," she said frankly. "With the decline in our volumes, we are going to be a smaller company in the future than we are today."

The core letters business tumbled to a £120 million loss last year as consumers increasingly turned to e-mail, text and social media for their communications. Royal Mail believes this rapidly-changing marketplace justifies a significant loosening of regulatory control over its operations.

Drafted in from her previous job as the head of Canada Post, Greene's remit is to prepare state-owned Royal Mail for privatisation. The coalition government's new Postal Services Act, which received royal assent earlier this month, will see a shift of regulation over Royal Mail from Postcomm to Ofcom.

Greene is hopeful that this change will loosen the restrictions on the organisation, which has price controls over 80 per cent of its £9.2 billion of revenues. She is particularly keen to claim more freedom in commercial negotiations for delivery over the so-called "final mile" - where Royal Mail takes responsibility for the final door-to-door delivery on behalf of rivals such as TNT Post and UKMail.

Greene claims Royal Mail is losing 2.5p on every letter it delivers for its competitors, and blamed this in large part for the rather dismal financial performance laid bare before the media last week. She conceded that Royal Mail is "balance sheet insolvent" as its liabilities, including its pension fund, exceed the value of its assets.

"If we don't get the structural change things can only get worse," she said. "The taxpayer will be asked to foot a huge bill."

Public policy analyst Tom Miers concedes that Royal Mail is under pressure "from lots of angles", but adds that the market for business mail - which accounts for 90 per cent of Royal Mail's revenues - is holding up reasonably well.

He says the group is losing ground to competitors because of its failure to overhaul outdated industrial practices.

He also dismisses the notion that covering the final mile for competitors is at the heart of the group's financial problems. Royal Mail must carry out these deliveries because its universal service obligation gives it an effective monopoly over this last leg of a journey.

"They always complain that they are not allowed to charge enough," Miers says, "but as long as the regulator gets that pricing right, you should be able to operate a universal network profitably."

Postal industry expert David Stubbs, of Trova Consulting, says the push for more freedom on setting prices would allow Greene to side-step the far more contentious issue of slimming down the vastly over-manned operation."We are looking at a business that at the moment is choosing not to make the returns that it should be making," he says. "Moya Greene wants to avoid the tough decisions, and a way to be able to do that is to let prices rise rather than forcing costs to fall."

Though polite and easy-going in front of the media, 57-year-old Greene is reportedly an aggressive negotiator behind the scenes. During her time at Canada Post, she was nicknamed "Darth Vader" by the unions for her ruthless approach. In the Royal Mail's case she says she is confident that any job cuts will be voluntary.

This approach saw Royal Mail's headcount fall by 5,500 last year, taking the total number of UK employees to 163,000.

But the reduction in headcount of slightly more than 3 per cent lagged behind the 4 per cent drop in core mail volumes. With the nation's daily postbag expected to shrink by about 5 per cent annually for the next few years, this would suggest that natural staffing churn will fail to keep pace as the business shrinks.

Stubbs points out that none of this takes into account the widely-hailed modernisation programme initially launched by Crozier and labelled as one of the biggest of its kind ever undertaken in the UK.

Royal Mail invested £400m in modernisation last year, taking the total amount spent to date on sorting, sequencing and similar machinery to roughly £2bn. However, much of this equipment has yet to be deployed.

"The easy thing is buying the machines and knowing which ones to get - everyone is happy because money is getting spent," says Stubbs. "The hard thing is to implement the structural change."

It is thought that future cuts could amount to anywhere between 20,000 and 40,000 posts, though Greene has avoided confirming any exact figures.

Says Stubbs: "To suggest there are going to be no compulsory redundancies means they are going to continue making losses for the next several years - there is no way around it."

[DGP1]

Postal industry expert David Stubbs, of Trova Consulting, says the push for more freedom on setting prices would allow Greene to side-step the far more contentious issue of slimming down the vastly over-manned operation.

Not in my office, we're trying to get the staff we actually need to bring us up to the level we need.

Maybe they need to cull the management and the support staff who are able to come out to work in offices when we're on strike.

[youwot!!!!!]

Postal industry expert David Stubbs, of Trova Consulting, says the push for more freedom on setting prices would allow Greene to side-step the far more contentious issue of slimming down the vastly over-manned operation.

Not in my office, we're trying to get the staff we actually need to bring us up to the level we need.

Maybe they need to cull the management and the support staff who are able to come out to work in offices when we're on strike.

never happen.
in our office they are just getting round to WCM and have promoted 2 managers to WORLD CLASS MANAGERS(i kid you not) on supposedly £60,000 a year.
now this might not sound so bad but we are one of the 4 smallest mail centres in the country so why the hell we need 2 of these overpaid muppets is completely beyond me!!!!!
they will only really start to offload managers when they are finally finished getting rid of postman and they realise that they still need to make savings but cannot afford to get rid of operational workers any more.

[noggin1969]

In the Royal Mail's case she says she is confident that any job cuts will be voluntary.

Ok were's my cheque , i'll get my coat