Source: Financial Times, January 21, 2009
Metro to cut 15,000 jobs in shake-up
German group to slash 5% of staff
Metro, Europe's second-biggest retailer, yesterday said it would cut 15,000 jobs, or 5 per cent of its work force, over the next three years.
The German retailer said the cuts were part of a restructuring that would move the functions of its central purchasing and logistics unit to its four retail divisions, giving them more operational independence.
The divisions are wholesale, hypermarkets, Media Markt electronics and Kaufhof department stores.
Metro also said it would bundle its property portfolio, valued at €8bn ($10.3bn), as a separate service unit - with an eye on floating a minority stake after 2011.
The moves underline how companies are using the global downturn to accelerate long-planned restructuring measures.
Metro said the cuts and restructuring would help boost its operating profit by €1.5bn by 2012.
Describe the type of organizational structure Metro has in 2009.
Does the restructuring indeed strengthen the four divisions?
What advantages resp. disadvantages of this structure are to be considered in this case?
Eckhard Cordes, Metro's chief executive, said the measures would help the group brave the downturn, although he said adjusting its structure to its fast-growing global presence had been in the works since before the current crisis.
'We are weatherizing the company through the introduction of this programme,' he said. 'Our focus is not simply to add up cost-cutting targets. Rather, we intend to exploit the opportunities offered by greater and faster market penetration.'
Metro said it expected to cut costs by €800m by 2012, with an additional €700m coming from productivity gains.
The Real hypermarket chain recently introduced a new own brand that has helped raise sales markedly, even in tough times.
The group said it was unable to estimate the cost of the restructuring as the number of job cuts would be known only after central purchasing was dissolved, but it hoped to eliminate as many as possible by attrition rather than redundancy.
Mr Cordes said giving each retail division mere freedom to decide what goods to sell would allow faster and better reaction to shifting consumer tastes, but without endangering Metro's buying power when negotiating with global suppliers.
More autonomy would also make it easier to give each division - including the new property division - performance targets. 'Operational units that fail to meet return targets will be systematically restructured or disposed of,' Mr Cordes said.
Since taking over as chief executive in late 2007, Mr Cordes has made no secret of his readiness to alter Metro's make-up, and has mulled selling Kaufhof and floating part of Media Markt to give it a takeover currency in the form of stock.