Office Depot sparks workforce anger

 

The European division of Office Depot is facing a staff revolt following a series of unpopular job-cutting initiatives and a restructuring programme.

 

Workers’ unions in France have already staged a series of walk-out protests under the banner slogan "Office Depot, you will not have our skin".

 

OPI understands several Depot facilities and stores including Paris North 11, Evry and Lognes have been targeted by protesting workers after a number of jobs were switched from France to Romania.

 

And now colleagues in the UK have expressed similar concern following the internal announcement of 150 redundancies as a result of the switch of the credit control function for contract customers, again to Romania.

 

The staff unease was compounded by the news that Depot’s Andover distribution centre would be shut down and the operation transferred to the company’s new state-of-the-art £50 million facility in Leicester, central England.

 

Workers have told OPI they expect a further 250 jobs will be axed as a result of the switch.

 

One staff member, speaking on the condition of anonymity, said: "There is a lot of anger and resentment within the workforce at the minute; there seems to be round after round of job losses.

 

"People really don’t know if their jobs are secure. Hundreds have been lost already and now there is a big question mark hanging over the people in the administration centre in Andover, which will probably be moved to the New Leicester as well.

 

"It will be a couple of years before they get rid of their SAP system so a lot of people are very concerned about the long-term security of their jobs.

 

"Nothing has officially been announced but hundreds of jobs have been cut via the back door."

 

Workers unions in France have already staged a number of protests to campaign against reorganisation within the company, which they claim will affect the quality of service customers will receive.They fear for the jobs of 50 workers following the closure of a call centre in Villepinte, the partial relocation of the financial services division to Romania, and the uncertainty surrounding another 290 jobs.

 

According to the French union CGT and Forces Worker, a total of seven call centres across France were being reorganised into two locations, Nîmes and Senlis. In a statement on one union website, Depot was accused of ignoring the "legitimate anguishes of its employees", who it claimed had been left "deeply confused".

 

Translated from French to English, the statement complained that company heads seemed to be "a lot more preoccupied by their dividends than by the salary degradation and working conditions, as well as the quality of service provided to our customers".

 

News of the workforce unease will do little to ease Depot’s recent volatile share price as uncertain investors fear industrial action on any scale.

 

CEO Steve Odland will have been alarmed by last month’s sharp decline of 3.9 percent in a day after Credit Suisse analyst Gary Balter downgraded his rating on the Delray Beach-based company from "outperform" to "neutral", citing concerns about the company’s challenges across all business segments and its struggle to win back lost customers.

 

Analysts at Jefferies initiated its coverage on Depot with a "Hold" rating. In a research note, the firm said: "We remain concerned about accelerating square footage growth in the face of negative comp store sales for Office Depot and the industry."

 

The company is already facing an uphill struggle as it seeks to implement its proposed strategy to withdraw the Viking brand from the European mail order market.

 

Earlier this year Depot announced its intention to follow the US division and remove the Viking name, and focus on being a single supplier name. The process, set to start in the New Year, will involve a programme of gradual dual-branding.

 

But already, the company has made plans to perform a U-turn if the switch-over meets with customer resistance. At an analyst conference in July, Odland described the strategy: "The way to think about this is that we are going to add the Office Depot name to the cover of the Viking catalogue for a multi-year period to start getting Viking customers to understand that we are Office Depot, to introduce the Office Depot private brand and to go through a slow, deliberate, multi-year conversion.

 

"If we find that there is resistance to it, we won’t do it. And that’s what a multi-year process of dual-branding allows us to do. It also allows us to access cross-channel shoppers, which are the best shoppers, and to leverage the business across Europe."

 

Charles Brown, president of Depot International, added: "I think the important thing to consider is how we are going to go about it. Initially, all we are doing is putting a co-brand Office Depot/Viking label on the cover of the Viking catalogue. It’s not a wholesale change.

 

"Moving to Office Depot removes a tremendous amount of complexity out of the back office in terms of being able to simplify your SKU assortment and actually being able to prospect across multiple customer databases."