Royal Mail confirms it will downsize to modernise

by Claire Foss, Marketing Direct 28-Feb-06

Just weeks into full postal deregulation, Royal Mail has confirmed that it plans to "become a smaller company", but is denying allegations from the Communication Workers Union (CWU) that up to 40,000 job cuts could be on the cards.

Royal Mail has revealed that it requires £2bn to modernise the
business, and CWU claim that they have been told of plans to cut £370m from the company by the spring.

Billy Hayes, general secretary of the CWU, said: "They have given us

these figures, although we accept that they are projected. But what is

clear is their intent to cut £370m, increase automation and turn
more full-time workers into part-time ones. The only way they can make
these savings is by cutting jobs."

A Royal Mail spokesman denied that any figures had been issued: "These
are not our numbers and they don't result from any plans that we have in
place. Royal Mail will almost certainly handle a smaller share of the
UK's mail in the future. It's too early to predict the impact on jobs
but, obviously, we will become a smaller rather than a bigger
company."

He continued: "We need around £2bn to modernise and we're facing
tough price controls from the regulator that don't allow anything like
as much investment as we need."

Royal Mail is already facing increased competition as a result of full
deregulation, introduced on 1 January 2006. TNT Mail has confirmed that
it has several large contracts in the pipeline, while UK Mail are in
discussions with four large telecoms and communications companies to
begin mailing in February and March.