Guernsey Post is slashing 30 jobs to mitigate what it describes as a "short-term" loss making situation which has cost it £2m in just three months.
10% of staff employed by Guernsey Post will be removed through either natural wastage when they reach retirement age or leave for other reasons, or through voluntary redundancy.
Chief Executive Boley Smillie has assured staff there won't be any compulsory redundancies but he said the company is now starting a "multi-million pound transformation programme" to try and "mitigate the impact of significant external cost increases and declining core volumes".
The utility's short-term loss-making position over the course of this year is forecast to be in the region of £2m, but Mr Smilie said "in total, our financial position has worsened by more than £3m in just over nine months."
Pictured: Boley Smilie, Guernsey Post Chief Executive.
“Over the last twelve months we have experienced a perfect storm of commercial circumstances," he said.
"Industrial action by postal workers in the UK has had a significant and detrimental impact on our volume 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.”
Guernsey Post says that to mitigate the losses and to return the company to profit a multi-million-pound transformation plan has been launched.
This includes the redesign of the Postal Headquarters at La Vrangue and a new fully automated parcel sorting equipment, which is due to be installed this summer.
That new piece of kit has cost the company £1.8m but will offer efficiencies as it can process up to 6,000 parcels per hour.
Pictured: Traditional mail volumes have been declining for years, but during the last few months of 2022 there was an overall decline in all mail.
Prior to this loss-making period, Guernsey Post had 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.
Mr Smilie said the company experienced an overall decline in volumes during the last quarter of 2022, which was the first time in more than 20 years things has been so bad. He said this was partly down to disruption to postal services in the UK.
“Over the last twelve months we have experienced a perfect storm of commercial circumstances. Industrial action by postal workers in the UK has had a significant and detrimental impact on our volume 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.”
Mr Smillie continued: “Whilst the underlying circumstances that have led us to this position are outside of our control the Board and team at Guernsey Post have initiated a very clear plan to achieve efficiencies and revenue growth, the totality of which we believe will improve our performance by £3m. Our investment is being funded entirely from our reserves and there is no requirement for borrowing or use of taxpayers’ money.”
He added: “All of my colleagues at Guernsey Post are very adept at dealing with transformation on this scale and understand the situation and what we all need to do. 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.”
Jersey Post has also come under financial pressure in recent years, having been hit by a blend of falling letter volumes, Brexit and the pandemic.
However, after three years of losses, the service recorded £1m of profit in 2021. Figures for 2022 are yet to be published.
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