Australia in shock as Pacific Brands slashes jobs
26/02/2009
Australian clothing company Pacific Brands has announced that it will shed 23% of its workforce, stop working as a marketer of some of the labels it works with and cut almost all of its own manufacturing, in favour of using outsource manufacturing partners, after gaining a six-month extension on US $215 million of debt.
Sports brands whose footwear and apparel it markets at the moment include Dunlop, Slazenger, Everlast and Maxfli.
Chief executive oficer, Sue Morphet, said in a statement that the company achieves 49% of sales from its 10 largest labels, and will now stop working with some of the less profitable brands. She said the company had put in place a comprehensive plan to reduce complexity, and added: “As the strategy is implemented we will use our increased operating cashflow to pay down debt.”
The company will cut a total of 1,850 jobs, with 1,200 positions to go from its Australian factories. Some of the seven plants to be eliminated will be shut while others may be sold as going concerns. The company had 8,126 employees at June 30, according to data compiled by Bloomberg.
On hearing the news, Australia's deputy prime minister, Julia Gillard, held a press conference and said: "We are very, very disappointed by the decision of Pacific Brands to withdraw from the majority of manufacturing worldwide and we understand that this is going to cause the loss of 1,850 jobs around the nation. This is a day of disappointment and it’s a day of hurt for those workers who are now going to lose their jobs through no fault of their own. But the government’s always been frank with the Australian people; that there were going to be days like this because of the global financial crisis and the global recession and the way it is bearing down on our economy; and there will be more days like this. More days when we hear about job losses and closures; more days when we hear about this kind of bad news because of the global financial crisis and the global recession."
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