Transcontinental Eliminates 1,500 Jobs Amid Cost-Cutting Measures
Transcontinental last week announced a number of major restructuring measures in response to the recession. Approximately 1,500 jobs will be eliminated as a number of cost-cutting measures are being implemented throughout Canada, the United States and Mexico.
A company press release cited "the rapid deterioration of the economy" and less spending by a number of Transcontinental's customers as having significant impacts on the company.
"It's a difficult situation for everyone affected, but we are acting in the interests of all of our employees and our shareholders," said Francois Olivier, president and CEO of Transcontinental. "In the short term, this rationalization comes at a cost, but in the medium term it will protect the corporation's financial health."
Due to the economic downturn caused by the financial crisis, Transcontinental announced in November 2008 that it was consolidating the operations of Transcontinental Direct USA Inc., its U.S. subsidiary. This consolidation, along with a company-wide review of production capacity, the adjustment of costs to demand, the closure of plants and the termination of some publications involves the elimination of 1,500 jobs. The employees affected by the cuts will be entitled to severance packages and professional career counseling services.
Other cost-cutting measures being implemented include a hiring freeze and reduced work weeks. The company's senior managers have agreed to take two weeks of unpaid leave but to work throughout that period. In total, these measures will cut costs by about $75 million on an annualized basis, including $50 million in 2009. Capital investments have also been reduced.
"We plan to maintain our prudent balance between our profits, costs, debt and investments," said Olivier.