Guernsey Post to make 30 staff redundant after loss
Guernsey Post is to make a tenth of its workforce redundant after it made a loss of £2m. last year.
The States-owned utility has announced it will shed 30 full-time jobs, after it experienced an unprecedented decline in deliveries at the end of 2022.
It is now looking to a multi-million pound investment in fully-automated parcel sorting equipment to transform its fortunes.
Chief executive Boley Smillie said that over the last 12 months the company had experienced a perfect storm of commercial circumstances.
‘Industrial action by postal workers in the UK has had a significant and detrimental impact on our volumes and revenues which has been compounded by inflation-busting increases in contracts with our key suppliers. In total, our financial position has worsened by more than £3m. in just over nine months.’
Against a backdrop of UK postal strikes, late changes to Royal Mail last posting days, newspaper stories of rats and foxes chewing on abandoned parcels at UK sorting offices, and a cost of living crisis, many islanders decided to reduce greatly the amount of post they sent and cut back on online orders.
Guernsey Post saw the volume of letters fall by 26% in the final quarter of 2022, but more surprising was the decline in parcel post, with the company experiencing an overall decline in volume for the first time in more than 20 years.
‘We expected a decline in letters of 5% to 10% but the 26% was exceptional, that’s Christmas cards, cheques, bank statements and household bills. That business won’t come back,’ he said.
‘But e-commerce will recover.’
The company has been also hit by increased costs, not just with its partners in the UK, but with postal services across the world.
‘Everyone has been putting up their rates,’ he said.
‘The cost of delivering off-island has increased by £4m. over the last three years. We cannot raise our tariffs to cover these costs as these are services that are already in decline, particularly letters and cards. Increasing charges will just accelerate this decline.’
Job losses will be spread across the company and affect back office as well as front-line workers.
Mr Smillie reassured staff that there will be no compulsory redundancies, but changes will take place through a combination of natural wastage, and possibly voluntary redundancy.
Mr Smillie said that both trade unions representing postal workers had been part of the process.
‘We hope all the changes will go ahead in the next calendar year, and by 2024 we will return to profit,’ he said.
‘We returned to profitability after losing LVCR and we will do so again’
Guernsey Post hopes to return to profitability by investing £1.8m. in automated parcel sorting equipment.
The new machinery can process up to 6,000 parcels per hour and includes built-in scanning technology.
The company hope that it will be installed and operational by September.
Chief executive Boley Smillie said that while the underlying circumstances that have led Guernsey Post to this position were outside of its control, the company had a very clear plan to achieve efficiencies and revenue growth to improve performance by £3m. a year.
‘Our investment is being funded entirely from our reserves and there is no requirement for borrowing or use of taxpayers’ money,’ he said.
Guernsey Post has made a profit each year since 2010, contributing more than £20m. during that time to the States Treasury in the form of dividends and special dividends.
The next sitting of the States will be presented with the company’s accounts for the year ending March 2022 when it returned a profit of £1.6m.
Building work to install the new sorting machine will start in June and involves significant changes to the sorting office which needs to be redesigned.
‘All of my colleagues at Guernsey Post are very adept at dealing with transformation on this scale,’ said Mr Smillie.
‘In many ways the current circumstances are similar to those in 2012 when low value consignment relief was abolished and the then-thriving bulk mail volumes diminished over a very short period of time.
‘At that time, we successfully reorganised the business and returned the company to profitability, and we will do so again.’