Spain’s Correos set to cut 2,000 jobs this year

The new president of Spain’s loss-making postal service Correos, Javier Cuesta Nuin, has said his company is planning to cut 1,900 to 2,000 jobs this year, after cutting twice that number last year. Appearing before Spanish lawmakers in the Budget Committee last week, Cuesta said the cuts were necessary for the survival of the company in a “very difficult economic environment”.

With declining demand for mail services in a market that has been fully open to competition since January 2011, Cuesta said efforts to increase revenues in recent years had not been enough to stem the company’s losses.

Correos achieved a EUR 1.9bn in sales in 2011, down 8.9% on the previous year, and while operating costs were down 3.5% compared to 2010, Cuesta said at EUR 2.1bn his company made a EUR 164.4m loss last year.

Increasing Internet use has seen mail volumes in Spain declining 24.8% since 2007, with a “significant” 7.9% decline in 2011 alone, in a country that already has one of the lowest mail volumes per capita in Europe.

Partial liberalisation of the market had already seen competitors increasing their market share in recent years, and a number of European operators are now carrying out “aggressive” efforts to expand their customer base, Cuesta said.

The Correos president predicted that “sluggish” demand would continue with a 5% annual decline in postal business projected for 2012.

Correos is awaiting clearance for various state aid funds to support its universal service business, but Cuesta said the market is changing rapidly, requiring changes in his company and its workforce. The company has seen the number of its employees falling from around 68,000 in 2008 to around 61,000 last year.

“This year’s planned reduction of postal work is about 1,900 to 2,000 jobs in 2012, about half of those in 2011,” Cuesta said last week. “There are a number of measures that can cover this, including voluntary redundancies and the transfer of staff from Correos – around 22,000 – back to central government.”

Modernisation

Despite the continuing reduction in the work force, Cuesta insisted to the Budget Committee that there would be no reduction in service quality.

“We will continue maintaining the same quality, and given that we continue to increase the rate of modernisation in the sorting of mail, we will even increase the quality in the provision of the universal postal service despite this decrease in personnel,” he said.

The company is planning to invest EUR 74.3m in its infrastructure in 2012 to continue automation, transport and IT improvements.

Cuesta said Correos had already achieved a high degree of adoption for efficient technology in its modernisation efforts underway since 1999, but is now implementing telematics systems to further improve efficiency and service quality.

Correos will be looking to grow its parcel services and expand into new markets, with additional financial services and other services making use of the network capabilities.

He said of this year’s plans: “The line of action that Correos is planning to take place in 2012 aims to reorient its strategy in three directions: to ensure adequate provision of the universal service, review multi-year strategic actions to strengthen the position of Correos in its markets, and enhance revenue streams and increase operational efficiency to reduce spending in order to minimise expected budget deficits.”