Tomkins cuts 1,500 jobs: Over-capacity slashed at Ranks Hovis McDougall

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The Independent Online
TOMKINS, the industrial conglomerate, yesterday disclosed that it had slashed 1,500 jobs at Ranks Hovis McDougall, the bread maker it acquired in December.

The job losses were part of a rationalisation programme implemented by Tomkins to help reduce the over-capacity that has dogged the bread-making industry, and to cut RHM's operating costs.

Greg Hutchings, Tomkins' chief executive, refused to comment on whether there were more redundancies to come. But he disclosed that the group had established a pounds 90m provision for the costs of the reorganisation, two-thirds of which is earmarked for redundancies.

At an average of pounds 30,000 of redundancy pay per employee - higher than would be expected at a company like RHM - that would cover 2,000 job losses.

The job cuts have been across the group's businesses, including Mr Kipling cakes and cooking ingredients like Paxo, Sharwood's and Bisto, as well as the Mothers Pride and Hovis bread brands.

Among the first casualties were RHM's directors, who have now all left the group - although one remains as a non-executive director. RHM's head office at Windsor will be closed and a new tenant is being sought.

In baking, Tomkins has cut capacity by 7 per cent by closing three bakeries - at Croydon, Exeter and near Cardiff - and reducing production in Birmingham. Mr Hutchings said that was 'huge progress' in five months, but he would not disclose whether further closures were likely. The company is also cutting costs in the flour-milling business.

RHM supplies about 34 per cent of Britain's bread. Tomkins said that demand in 1992 rose by about 1 per cent, reversing years of declining sales.

The size of the rationalisation provision was higher than some in the City had expected, but Mr Hutchings' comments sent the shares up 13p to 236p.

As well as the pounds 90m provision, Tomkins intends to write off about pounds 450m of brand values, which RHM had included in the balance sheet, and write down some assets.

(Photograph omitted)

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