Job Cuts in Canadian News: Concerned?

November 26, 2012

In the last couple of months, some high-profile Canadian organizations have joined peers around the world in announcing job cuts. Various reasons have been given for the cuts and many have been part of wider cost reduction plans. So is this news further evidence for those predicting bad things for 2013, or does it simply reflect prudent business strategy in competitive markets and difficult economic times?

 

In a move that the Canadian arm of the Communication Workers of America (CWA) called a “slash-and-burn” strategy, Quebecor Inc. this month announced about 500 jobs cuts at its Sun Media newspaper division.

“If we’ve learned anything over the last few years, it’s that cutting jobs only hurts quality and that does nothing to attract readers or generate revenue,” said CWA Canada director Martin O’Hanlon.

Quebecor will close two production facilities in Ontario and says it is trying to cope with lower advertising revenue.

The job cuts represent some 10 per cent of Sun Media’s workforce.

“We eliminated several layers of management to streamline our processes, reduce our costs and bring decision-making closer to the local markets,” chief executive Pierre Karl Peladeau said. He added that Quebecor will use its media platform, including cross promotional activities with Sun News TV and French-language TVA Group, to “bundle our news media products into an integrated multimedia advertising solutions for our clients.”

Quebecor will also “dispose or shut down all non-core activities” as part of an effort to reduce annual costs by $45 million, Peladeau said.

 

HBC said Friday it is laying off 210 employees in Toronto as the company moves its information services (IS) department to the United States to reduce spending.

HBC spokeswoman Tiffany Bourre said 130 jobs from the Canadian IS department will go to an office in St. Louis, Missouri, which will become the headquarters for IS. Another 80 jobs will be eliminated. The layoffs will happen in the next 12 to 18 months, she said.

“Since the acquisition of the majority of Zellers locations by Target we have been adjusting our operations, both at corporate office and store level, to reflect a modified organization,” Bourre added by email. “As we continue to review and assess resources, it is apparent that we must improve the cost effectiveness of the current IS structure.”

 

Meanwhile, Shoppers Drug Mart said its decision to cut 80 jobs is part of its strategy to cut costs in response to drug reforms across Canada.

The reforms, brought in last year in Ontario, Quebec and British Columbia, cut generic drug prices to 25 per cent of the price of patented drugs — down from 50 per cent. The company has said those reforms affect revenue by an estimated $750-million a year.

More recent changes in Ontario have brought the price of the top 10 generic drugs to 20 per cent of the branded equivalent, which will hit the company even harder.

“In response to drug reform initiatives across Canada, we significantly reduced our new store capital program and have taken steps to address our cost structure,” said spokeswoman Tammy Smitham.

“This includes ensuring that our central office resources are aligned to best support the strategic priorities and initiatives of the business moving forward, allowing us to continue to grow, while delivering acceptable returns.”

Shoppers has also been working to mitigate the changes by driving sales of non-pharmaceutical items, like food and cosmetics.

The company is also looking to improve its supply chain, as well as the productivity at its pharmacy operations, an initiative it expects will provide “significant gains” over the next eighteen months.

 

We cannot say for sure whether a further downturn will cause these and other Canadian companies to struggle in 2013. And while we always urge organizations to consider jobs cuts only as a last resort to reduce costs, we understand that there are special circumstances under which they are necessary. However, as surely as corporate communicators will downplay news of job cuts, we can say that every organization should be investigating every option to manage costs more effectively right now.

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