Tag: Business Post

Royal Mail faces strike on pay and jobs

Posted by | Jun 7, 2007 | |

The Royal Mail is facing its first national strike in 11 years after the Communication Workers Union (CWU) said its members had voted in favour of industrial action.

The CWU said on Thursday that 77.5 percent voted in favour of action due to Royal Mail’s “below inflation pay offer” and its plans to reduce the workforce by around 40,000, or around 27 percent, by automating mail-sorting processes.

“A series of walkouts will now be held by about 130,000 CWU members unless new talks can lead to a breakthrough in the dispute,” the union said.

The CWU members range from post men and women to sorters in distribution centres, and the union said 66,064 of its 127,000 members balloted voted for action, with 19,190 voting against. More than 20,000 employees are not members of the union.

The Royal Mail said it had to modernise to prevent the business from failing and that the only way it could improve pay, protect pensions and deliver customer service was by modernising.

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Post strike could cost Royal Mail GBP 300m

Posted by | Jun 3, 2007 | |

Royal Mail has privately warned that a national postal strike could cost up to GBP 300m in penalty payments and lost income, according to senior industry figures.

Royal Mail executives have made the claim to a group representing major business users, while indicating similar consequences to industry regulators.

As the Communication Workers Union prepares to announce on Thursday the results of a national strike ballot over pay, conditions and a potential restructuring of the business, Royal Mail has drawn up contingency plans that include drafting in up to 7,000 managers.

The CWU is confident that its 130,000 membership will vote in favour of the first national strike in 11 years, pointing to independent polls which indicate that 65 per cent will say yes to action.

Earlier this month Royal Mail asked Postcomm, its regulator, to make an exception in the case of industrial action to regulations governing penalty payments if service standards fall. At present a strike is not considered ‘force majeure’ under the regulations, and if there is a stoppage, Royal Mail can be penalised.

This can happen in several ways: a compensation scheme for businesses which reduces Royal Mail’s future revenues, a quality benchmark that it must meet or trigger penalties – known as the ‘C factor’ – and direct fines from Postcomm. Royal Mail believes the first two measures could cost it up to GBP 300m in the event of protracted strikes, and on 2 May asked the regulator to waive them for two years.

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Business Post's UK postal arm overtaking Parcels

Posted by | Jun 1, 2007 | |

Business Post predicts its UK Mail postal arm will overtake its parcels business in the next three to five years. Chief executive Guy Buswell says that UK Mail generates 27% of the revenue for the company and this fits in line with Business Post’s growth strategy to become “the leading integrated postal operator”.

Business Post’s preliminary results for the year to March 2007 show the company now has a cash balance GBP 12m, up from a GBP 0.4 overdraft in 2006. Group revenue grew by 17% to GBP 326m, from GBP 278m in 2006. Pre-tax profit nudged up to GBP 11.5m in 2007 from GBP 11.4m, while operating profit grew to GBP 12.1m.

But revenue for the company’s parcel business slipped by 1.2% to GBP 194m, while UK Mail’s revenue soared by 124% to GBP 90.3m.

Buswell says the company has “done an awful lot within a year”, referring specifically to the take-back of 11 franchise operations into corporate ownership. “The key thing for us was to take those businesses and turn them around to at least break-even, and we’ve done that,” he says. Business Post has 16 remaining franchise operations, but these are all profitable businesses.

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Royal Mail delays drawing on funds for modernisation

Posted by | May 26, 2007 | |

Royal Mail has yet to draw on a Pounds 1.2bn loan made available to automate its operations under a new financing framework arran-ged more than a year ago.

The investment package announced last May by Alistair Darling, trade and industry secretary, was intended to help Royal Mail compete against the new breed of private-sector postal operators after it lost its monopoly at the start of 2006.

But although big business mail users are deserting Royal Mail in droves, Britain’s dominant postal operator has failed to take advantage of the new system. HSBC and Lloyds TSB are the latest to shift their bulk mailings to UK Mail, part of the Business Post Group.

News that TNT, one of Royal Mail’s biggest rivals, has been granted the right to launch a legal challenge over the state group’s exemption from VAT will come as another blow.

The fall in business customers and the growing competition from its rivals are not the only problems for Royal Mail. The number of items of mail fell last year for the first time in decades, with most in the industry expecting further declines in the future as email and other digital messaging systems replace “snail mail”.

In addition the government has been unable to find a high-profile business executive from the private sector to be deputy chairman and succeed Allan Leighton as chairman next year. And now the postal union is balloting members on a strike over this year’s pay offer, warning of more fights ahead over changes in working practices, staff cuts and the plan to close the pension scheme to new entrants.

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