Down, down, deeper, n’ down

Desperate times call for desperate measures

Good gracious. The news about Wolseley’s 2,000 job cuts in the UK just made the BBC lunchtime news.

Yes, it’s that bad.

Not that it’s anything surprising. Even Wolseley’s management in their earlier statement in September said they believed the situation would get worse. Always nice to be proved right, I suppose, but in this case probably not so nice if you happen to be manager of one of the 200 branches being axed.

The housing and construction market problems began in the US and they did their best to deal with it there, the problems migrated to the UK and Europe and this is the group’s latest attempt to stem the tide. This time, the group’s statement mentions the huge profit drops in both the UK and the Nordic countries; maybe the high profile purchase of the DT Group doesn’t look quite such a good idea now, but then hindsight does give you wonderfully clear vision.

I guess the problem with being a huge business is that when things go wrong it takes huge measures to put it right again. An independent business can make quick decisions, be pretty flexible in their response to difficulties, can decide not to give too much credit to anyone customer. Big national chains, with shareholders to report to, tend to need to follow prescribed patterns – it’s the way to keep control of large businesses.

It would be nice to think that this is the last of the announcements of big redundancy programmes, after all, this website has been full of nothing else recently it seems. But even Wolseley themselves say they expect things to get even worse and are prepared to consider “selective actions” to prevent them breaching banking covenants. Belts will need to be tightened a lot further before we are through this.

Still, it’s nice to hear some good and positive news, such as Nottingham independents Frank Key buying Parker Severn with a view to it being the beginning of their expansion programme. There are other independents too, who aim to use the current downturn as an opportunity rather than a compete threat.

So, not all bad news then. Just mostly.

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About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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