Alliance Boots to cut 900 jobs

It's a blow to workers, but there was a sense that it was inevitable.

by Emma Haslett
Last Updated: 06 Nov 2012
Alliance Boots has said that it’s planning to cut 900 jobs from the health and beauty division of its Nottingham headquarters, in an effort to cut costs by £56m a year by 2013/14. It’s a controversial move, and has already provoked a lot of ‘I told you so’s from private equity critics, who weren’t too happy when PE firm Kohlberg Kravis Roberts staged a £12.4m buyout of the company back in 2007. But Boots has defended the move, pointing out that since the takeover, it has actually increased the number of jobs available across the company. That’s not going to come as much comfort to those concerned, though…

The company has already stipulated that there won’t be any redundancies among its store staff, and that the majority of the cuts will instead concentrate on cutting down on IT staff, ‘streamlining’ its manufacturing and supply chain, and removing extra layers of management. In fact, it added, the job cuts account for less than 10% of the non-store staff in its health and beauty divisions – a fraction of its total 700,000-strong workforce. And while most of the cuts will inevitably be made through redundancy, it says it is hoping some of them can be made with ‘normal staff turnover’ and ‘redeployment’ to different areas of the business.

Still – don’t expect KKR to get off lightly. Its 2007 takeover of the business was pretty messy: not only was it dragged into lengthy disputes with unions over job cuts, but it even ended up being hauled in front of a Parliamentary inquiry over pensions. At the time, the firm promised workers that Nottingham would stay ‘at the heart of’ its operations – but students of the private equity model knew that the top-heavy headquarters would eventually come under the spotlight.

Unions are, naturally, annoyed: GMB union leader Paul Maloney said he would ‘seek urgent talks’ with the company (that may be a short discussion: Boots has since pointed out that most of the workers affected aren’t union members). But Boots insiders have actually drawn attention to the fact that since its takeover, the group has managed to create 1,500 new jobs.

With profits up to £475m this year from £13m the previous year, it may seem like a strange time to make redundancies, but there’s a sense that it was inevitable. Alex Gourlay, CEO of Alliance Boots’ health and beauty business, has indicated as much. ‘This is the completion of the task we knew would be a part of putting Alliance and Boots together,’ he said yesterday. Quite.

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