JJB's and Microsoft's answers to the recession

Strange ways firms are cutting back

Believe it or not but some firms have been reducing their costs in strange and different ways than people would believe. In recent weeks with the economic situation we are in, firms have been cutting jobs, such as BT (British Telecom) cut back 10,000 jobs at the end of November last year. However the popular sports retailer JJB has decided to cut back in another way before cutting jobs, it sold its 2 helicopters! The chairman of retailer JJB Sports has ordered the sale of the Wigan-based chain's two corporate helicopters in an attempt to shave £1m a year off the company's overheads. The firm's Agusta 109 has already been offloaded to a Middle Eastern buyer for £4m and the other is on the market, with a deal expected within weeks.

(Left -this helicopter is sky-high - not like JJB's sales!)

(Right - the old CEO Chris Ronnie)

When Sir David Jones started, he began an immediate review of JJB sports when he took over as chairman earlier this month. He is looking to slash its costs and reduce its debts while aiming to restore it to profitability. The retail veteran transformed Next in the early 1990s and made the sale of the chain's helicopter one of his first decisions. "They cost £1m a year to run and as the company is doing whatever it can to survive the recession, he has decided they must go. He has also instigated a reduction in stock levels as an urgent measure to further cut the company's costs as part of his restructuring and recovery plans."

Microsoft
The Wall Street Journal reports the rumored
Microsoft job cuts may come as early as next week. It is uncertain if the job cuts will actually happen, the Wall Street Journal said Microsoft is looking for alternatives to cutting jobs. Those numbers are likely going to be “far less than the 15,000 positions” first thought, sources tell the paper.

Microsoft, like Google, rarely has job cuts. Microsoft has over 91,000 employees, and has grown the employee base by 15%, from 2007 to 2008. It would be interesting to see if Microsoft does cut jobs. It would be a bold statement from Microsoft to not cut jobs and snuff Google’s latest job cuts and product slashes.

We should find out soon enough, so keep checking the blog for the latest information - it'll keep you posted!

France, a time of troubles?

The recession in France

On Thursday this week (22/01/2009) a Peugeot factory in Poissy, just west of Paris, annonced it was going to operate shorter weeks, due to a decrease in car sales. This will help them to reduce some of their variable costs in employment.

It shut down completely for four weeks over Christmas. Some people were lucky enough to be able to keep their jobs however others were less fortunate. 700 workers who previously had temporary contracts have lost them. “There’s a real fear that redundancies could be next,” says Georges Martin, a union official who has worked there for 33 years.

The French may not be troubled by heavy mortgages, or credit-card bills, but fears of unemployment are rising as recession takes hold in the country. In November France’s unemployment total reached 2.1m, compared to an 8.5% rise on a year earlier. Other European Union countries such as Spain and Ireland are seeing even sharper rises in unemployment, as Europe’s economies head into what European Commission forecasts suggest may be their worst year since the 1970s (see chart). French unemployment, now 7.9%, could top 10% by 2010. Joblessness is growing fastest among under-25s, many of whom are being laid off as firms cut those on short-term contracts.

The government is most worried about the car industry, which directly employs 700,000 people in France (6,600 of them in Poissy), and indirectly 2.5m. This week François Fillon, the prime minister, told car-industry bosses that state help would go only to firms that kept production (and jobs) in the country. The Europe-wide concern that rising unemployment could provoke social unrest is particularly acute in France, where even in good times protesters take readily to the streets.

There have been various outbursts in recent weeks. When President Nicolas Sarkozy dropped in on a town in Normandy, the police had to use tear-gas to control a crowd of protesting students and teachers. Militant unions in Paris forced the closure of a railway station, Saint-Lazare, for a day, and have paralysed public transport in Marseille. In December Mr Sarkozy postponed a school reform out of fears, prompted by riots in Greece, that French high-school protests could get out of hand and even set off a rerun of May 1968.

NEWS - UK is officially in recession (23/01/09)

The UK is now in recession for the first time since 1991.

Gross domestic product (GDP) fell by 1.5% in the last three months of 2008 after a 0.6% drop in the previous quarter. It represents the biggest quarter-on-quarter decline since 1980 and a 1.8% dcrease from the same quarter a year ago. (GDP is the most commonly used indicator of national income - it measures the sum of incomes received by the various wealth-creating sectors of the economy, from manufacturing and retail to agriculture and service industries.) This means that people have been earning less because of reasons such as jobs being cut. Consequently people tend to have a fear of spending too much money which might cause them financial problems later on as nobody can be certain of what the future holds. This actually puts the economy under even more pressure as the key solution to the problem is trying to get consumers to spend more.


Bleak retail sales have forced firms such as Woolworths into admission accelerating unemployment within the UK.

The Office for National Statistics (ONS), revealed that manufacturing made the largest contribution to the economic slowdown. The industry fell by 4.6% despite hopes that the weak pound would help exporters. The ONS also revealed that all elements of the economy shrank from the previous three months except for agriculture.

Could anything have been done or be done?

There have been many efforts to prevent the recession deepening, although critics say they have not gone far or done enough. For instance, the Bank of England has aggressively cut interest rates to 1.5%. The reason being they tried to drive down the cost of lending so that it would make it easier for consumers and businesses to access credit. However on the other hand banks have been reluctant to lend sufficiently, despite a £37bn injection into major banks, and a scheme to offer insurance to banks against potential losses on risky loans.

Furthermore a temporary cut in value added tax (VAT), from 17.5% to 15%, was an attempt to encourage consumers to spend and boost the retail sector and wider economy.