Up to three quarters of the leading 1,200 companies in the fresh produce sector will need to reduce staff numbers in the coming year as the credit crunch takes its toll, according to the 2008 Plimsoll Analysis.
This could lead to 3,500 jobs being lost as businesses move costs into line with sales, with up to 800 jobs potentially in jeopardy at one leading company alone.
The figures come on the back of warnings from the Chamber of Commerce that unemployment nationally could rise by up to 300,000 over the next 12 months as the economy adjusts to tighter margins. Almost a fifth of the fresh produce companies surveyed were already running at a loss, and companies needed to generate at least £321,000 of sales per employee to stay competitive, Plimsoll added.
“While job losses are undoubtedly bad news for any company, such decisive action may be called for to guarantee the ultimate survival of the business – even if this means the business is 30%-50% smaller than it was,” said senior analyst David Pattison.
Plimsoll has identified 200 companies as being in ‘danger’ – in heavy debt and in urgent need of consolidation. These businesses may have to shed up to 30% of their workforce to stay in the market, Pattison argued.
“These 200 companies need to act now if they are going to survive,” he stressed. “It is very important they review their entire business cost base and take action now to significantly reduce their outgoings.”
However, Plimsoll also identified 557 companies recording sales per employee of more than £371,000. These businesses would profit from the demise of weaker competitors, Pattison said, predicting high levels of merger and acquisition activity.