Waterford Wedgewood’s new owner plans to outsource jobs

The company should have been given over to its workers, without whom the company is nothing. The old bosses had failed, the workers should have been given a crack of the whip – the British and Irish governments could have helped turn the firm into a workers’ cooperative. But no, both states are structured to help the rich get richer, not to keep workers in good jobs.

Now most of them will be sacked – their jobs going where the wages are cheaper, all part of the “free” trade “free” market race to the bottom. The rest will no doubt be called upon to take pay cuts – all to restore the profitability of the firm for its new owners.

We all face this situation – the fear that if our jobs aren’t exported our wages will stagnate. But if we were the owners, we wouldn’t be trying to squeeze profit out of ourselves – we’d be trying to make a living, not a killing!

This candid article is from the Financial Times, and I’ve put the pertinent information in italics and bold:

The new owner of Waterford Wedgwood plans to use the fabled but struggling ceramic and crystal tableware brands as a platform for acquisitions after cutting costs and transferring production of all but the most prestigious products overseas.

Michael Psaros, co-founder of KPS Capital Partners, said that his strategy for turning round the lossmaking company was to cut costs by streamlining its back office operations and shift more production to cheaper countries.

“It is all based on costs and we are not assuming any revenue growth to achieve profitability,” said Mr Psaros, who completed the purchase of the major assets of Waterford Wedgwood out of receivership last night. “We intend for Waterford Wedgwood to be an acquisition platform in this industry and we’re prepared to invest very significant capital in helping to grow the hell out of the business.”

The deal transferred 3,800 staff and many Waterford Wedgwood assets out of receivership, such as its Staffordshire china factory and visitor centre, and its biggest brands, including Royal Doulton and a licence to make Vera Wang pottery.

New York-based KPS, which specialises in buying troubled companies, will invest €100m (£94m). The company will be “virtually debt free”, after leaving €800m of debt and pension liabilities in receivership. The deal involved operations in 10 different countries, including the US, Japan, Australia and Singapore.

KPS is not buying any assets in Ireland except the stock of products. Mr Psaros said 173 of the 480 staff in Ireland would continue to work, but they would be employed by the receivers, not the new company. A consortium of local Waterford-based businessmen are in talks with the Irish government to fund construction of a new crystal factory in the area. Mr Psaros described the existing factory as “a dinosaur manufacturing plant”.

Mr Psaros said the company was already moving its Waterford crystal production to Germany and Slovakia, and its Wedgwood and Royal Doulton china production to a factory in Indonesia. But he said “it didn’t do it fast enough”.

“We are going to accelerate transfer of activity from the UK to Indonesia,” he said. “Indonesian labour is 85 per cent cheaper than the UK. But the real works of art and highest-end products will still be done in Barlaston.”

John Lewis Partnership – socialism in action

As capitalist-owned enterprises lay off workers and cut wages, the worker-owned store John Lewis – consistently voted one of the best for customer service by consumers – pays out a 13% bonus to staff. Why? Because they own the business – they won’t be asking themselves to take a pay cut!

I’m not saying that John Lewis is some kind of paradise in a sea of exploitation – it isn’t, but clearly, workers owning the enterprises in which they work is no impediment to building successful businesses (sales are up!) and responding to consumer demand (Waitrose are brining out a budget range, for example) whilst at the same time “sharing the proceeds of growth”, to coin a phrase.*

From Wednesday’s Guardian:

The annual bonus paid to John Lewis’s 70,000 staff has shrunk by almost a third after profits at the partnership were hit by the recession.

But staff still cheered the news that they will receive a bonus of nearly seven weeks’ pay, down from 10 weeks’ pay a year ago.

Because John Lewis is owned by its staff, every one of them – from the boardroom to the shop floor – receives the same percentage payout. This year it is equal to 13% of basic salary for staff at the Waitrose supermarket chain and John Lewis department stores.

At the John Lewis store on Oxford Street this morning, more than 1,000 shop staff hung over the balconies to learn what their annual bonus would be.

In the well of the atrium, Noel Saunders, managing director of the store, worked the crowd like a game show host, hinting the highest partners could expect was a 12% payout.

At 9.28am, as partners counted down from 10, his assistant Paul Thomas – who has worked in the floor coverings department for 20 years and was selected for scoring excellent results from mystery shoppers – fumbled with the envelope before pulling out a giant card bearing the figure 13%.

As customers peered through the doors, partners erupted, celebrating the bonus payment after a tough year on the shop floor.

The total bonus payout for 2008 is £125.5m, down from £180m for 2007.

“The key difference is this is a genuine bonus based on profit-sharing,” said Andy Street, managing director of John Lewis. “The word ‘bonus’ has become discredited in the economy, but for us it is something to celebrate. Our partners have worked harder than ever to achieve these results.”

The feel-good atmosphere pervaded all six floors with no grumbles from partners that the bonus fell short of last year’s bumper payout.

“Last year, 20% was a fantastic result, but in the current climate we are really happy to get a bonus as we see people around us losing their jobs,” said Charlotte Deane, who will use her bonus to catch up with her sister, who is travelling in California. “However much it is, it is a bonus, not a benefit, and I feel lucky to get it.”

Most staff canvassed expect to use the extra cash on a holiday. Indira Vakeria said she was planning a trip to India to visit her parents. “We are really pleased with 13%,” she said.

The company reported that its profits fell by 26% in 2008 to £279.6m. Chairman Charlie Mayfield warned that 2009 would be “another very difficult trading year”.

“Trading conditions worsened markedly during the year as the problems in the financial sector reduced consumer confidence to a low level,” he said.

The partnership conceded it would no longer be able to hit its target of opening 10 stores in 10 years. It has already opened four, including branches in Liverpool and Cambridge, but beyond its new Cardiff store this autumn, and a shop at the Olympic site in Stratford slated for 2011, it said its aggressive growth plan would be “delayed”.

The company said it remained optimistic that two stores across the Irish Sea, one in Lisburn in Northern Ireland and one in Dublin, would open as planned but warned that other projects, including stores in Crawley and Portsmouth, might be held up. Retail schemes around the country are being mothballed as property developers grapple with funding shortfalls and collapsing asset values. Mayfield said the retailer was “working actively with developers to maintain our rate of growth” and remained committed to the expansion plan.

It is just over a year since John Lewis first admitted that its sales were being hit by the high street downturn. By the autumn, when the UK economy was contracting, the company was reporting double-digit falls in weekly sales.

* Please, don’t misunderstand me, I doubt that the Tories – expected to win the next UK election – will fulfill their promise of “sharing the proceeds” by forcing Tesco to become a cooperative. This is something the unions need to take up with New Labour, though…

Manufacturing meltdown! Productive economy faces catastrophy

It’s a funny old world. At the moment, I mean.

The Chinese saying goes: may you live in interesting times. I’m not sure if this is a friendly or unfriendly wish. Certainly the times are interesting, but also worrying.

Job “losses” are coming thick and fast. The old economic orthodoxies are being abandoned as the free market goes into free fall.

We’ve had a bailout of the financial sector – the government acting for the banksters, rather than for workers and customers.

But will there be a similar bailout of the productive economy?

After years of deindustrialisation we need to rebuild the manufacturing base of our economy with the aim of full employment, environmental sustainability, and workplace democracy.

A weak pound alone won’t save manufacturing…

The FT reports that:

Manufacturers are expecting the sharpest contraction in output in 30 years, according to a CBI survey published on Wednesday, which noted that the only time that a deeper decline had been expected was for two months in 1980 as the UK entered a recession.

The CBI Industrial Trends Survey, which covers October, came as the EEF, whose members are largely manufacturers, reported that one in four companies which had negotiated a pay deal in three months to the end of September had either deferred a decision or elected to freeze pay.

Separately, the Bank of England’s Agents’ Survey showed that companies last month pared back their investment plans to cover only essential expenditure as reports of small-scale redundancies and plant closures became more widespread.

Together, the three surveys point to a rapid deterioration in Britain’s manufacturing sector in recent months as the UK heads into a recession.

Commenting on the EEF and CBI surveys, David Yeandle, EEF head of employment policy, said: “The severity of these changes over such a short period of time indicates the extent to which companies are having to take immediate action to control their costs. It seems hard to believe it is only a few months since fears about wage inflation were so prevalent.”

Yeah, and it’s hard to believe that anyone took seriously the government claim that if public sector workers didn’t get a pay cut, there’d be rampant inflation…

Hundreds of “satisfactory” schools in England are threated with closure

From The News Line:

TEACHERS WILL FIGHT SCHOOLS CLOSURES

The National Union of Teachers (NUT) declared yesterday that the Brown government’s threat to close 638 schools for not reaching arbitrary targets ‘will be resisted’ – after the union found the closures ‘even more shocking and random than first appeared’.

On June 8th, Ed Balls, Secretary of State for Children, Schools and Families, published the names of 638 schools who were allegedly below the Government’s floor target of 30% of pupils getting at least five A*-C grades at GCSE, including English and mathematics.

However, closer scrutiny of the schools name, prompted NUT Acting General Secretary Christine Blower to say yesterday: ‘On deeper analysis, the government’s condemnation of 638 secondary schools is even more shocking and random than first appeared.

‘Only 11 per cent of schools in the sample were considered by OFSTED to need the intervention and threats now being employed by the government.

‘Indeed, it is extraordinary that 26% of the schools in our analysis are considered to be amongst the best in the country and around a third are in the top 40%.

‘A further 59% are considered to be satisfactory; a term in any normal dictionary definition which means that although there is room for improvement, those schools are meeting their pupils’ needs.

‘It seems to me that the government has decided to junk its recent attempts to introduce a measure of sophistication into evaluating schools in favour of a crude headline-grabbing measure to try to show that it is tough on standards.

‘The support outlined in the National Challenge programme will be obscured by this injustice. Teachers and head teachers will be very wary of wanting to join schools that could be threatened with closure.

‘I have written to our members and to all head teachers in the 638 schools expressing the NUT’s solidarity with them.

‘The NUT will not stand by and watch the vilification of school communities and the intolerable pressure put on Heads and teachers as a result of the government’s arbitrary actions.

‘School closures will be resisted and members will be protected from any excessive workload demands created by the National Challenge programme.’

The government’s proposals – contained in the documents ‘National Challenge’ and ‘Promoting Excellence For All’ – are the sticks used to beat educational workers into accepting the privatisation of schooling.

In her letter of support to NUT members at the berated schools, Blower says the NUT is not only opposed to the proposal to close schools, but also proposals to intensify monitoring and inspection regimes.

She continues: ‘The National Union of Teachers knows that you are making a positive difference to young people’s lives; young people who often come from the toughest of circumstances.

‘Schools need resources to meet the challenges posed by social and economic problems.

‘The £400 million committed by the Secretary of State to your school and the others covered by the “National Challenge” should be used to reduce class sizes, increase teaching, learning and study support and give teachers the time and space during the school day to develop links with their local communities, including parents.

‘It can’t be right that £260 million of the £400 million will be spent on establishing Academies and Trusts.

‘The Secretary of State is wrong in his view that somehow you can enhance the commitment, enthusiasm and innovatory capacity of teachers by threatening them with the closure of their schools if they fail to meet an arbitrary target.

‘The National Challenge should be about saying to teachers that it is a career advantage to work in schools in challenging circumstances, not a career threat.

‘You and your members will have worked hard for youngsters entering secondary schools, who may have started school caring little about learning.

‘For such youngsters, achievement in GCSEs, albeit that such achievement is below Ed Balls’ target may in fact be the pinnacle of achievement; yet nothing in Ed Balls’ target recognises that.’

Government ‘targets’, and the channeling of finances away from state schools into the pockets of the private sector, have created enormous tensions in the teaching profession, mirroring the same process in the NHS.

In the last week alone the NUT have been forced to also comment on:

• a threefold increase in the use of teaching assistants (costing £50 a day) to fill in for supply teachers (£150 a day) as highlighted by UNISON.

• pay rises for teachers, and,

• recruitment and retention of headteachers.

Commenting on the use of teaching assistants in schools, Blower said on Thursday: ‘Unison are right to highlight the injustice experienced by school support staff.

‘From our own evidence, many support staff are being expected to carry out inappropriate work and are paid very little for the unreasonable expectation placed on their shoulders.

‘Indeed our own evidence shows that support staff are being used to teach children with the greatest needs and are being used to cover for teaching staff over long periods of time.

‘Too often, support staff are considered to be the low cost option. It is quite clear to the NUT that all staff who work in school teams need a proper definition of their responsibilities and proper pay and conditions.’

Continuing on the question of pay, she added: ‘The justice of the case for increases in teachers’ pay has been reinforced by the inflation figures.

‘The Retail Price index is over 4%. Even the government’s preferred index for inflation is at a 10 year high of 3.3%.

‘In the face of energy prices set to rise by 40% by Christmas, the NUT will continue the campaign for Fair Pay for Teachers.

‘The Secretary of State must reopen consideration of teachers’ pay for September. 2.45% is not enough.

‘Teachers and other public sector worker unions cannot and will not stand by and see their members’ incomes and standards of living cut.’

These cuts have led to problems of Headteacher recruitment as highlighted by the National College for School Leadership.

Blower, said: ‘There is a problem with Headteacher recruitment; Steve Munby is right to highlight it. He is quite wrong to suggest that the solution is to appoint non teachers to such jobs.

‘Being a Headteacher is about leading learning. The NUT believes that to lead a learning community a background in teaching is key.

‘There is no shortage of classroom teachers who could become Headteachers. It is just that the pressures Heads face are intense and unreasonable.

‘The cause of low recruitment to Headship has to be removed. The second-class sticking plaster of people who have no background in teaching is not a solution.

‘More teachers would be attracted to Headship if the government didn’t pull stunts like the naming of 638 schools last week.

‘The education service needs Headteachers. The government needs to will the means and conditions that would make Headship an attractive option.’

The News Line calls on all teaching professionals to come to the ATUA conference on Sunday 29th June (see advert ), to organise the building of a leadership to defend all public services by bringing down the Brown government and going forward to socialism.