The slowdown in the UK economy could cost 3,000 jobs in the fresh produce industry, business analyst Plimsoll Publishing is warning.

But it will be the story behind these losses that will determine the survival of the companies in question. Customers, suppliers and competitors have no way of telling from a job reduction announcement whether the cuts were made in panic, or for clearly thought out strategic reasons.

“Obviously the reasons will make little difference to those who are losing their livelihoods,” said David Pattison, senior analyst at Plimsoll. “But for customers, suppliers or competitors there is a crucial contrast between cost cutting without any obvious focus and scaling back jobs as part of an active programme of management designed to steer the ship and keep the company competitive.”

Plimsoll’s latest survey suggests that of the 1,000 companies surveyed, up to 300 will need to reduce staff in some form or other. Driving this need are two main issues - the fact that 36 businesses in the sector are showing declining sales, and also the increase in salaries as a percentage of overall costs.

Salaries already account for five per cent of sales in the fresh produce industry. But if, as expected, wages rise next year by the projected four per cent to an average of £21,700, then 30 companies will be unsustainable businesses by this point, according to Plimsoll.

“This analysis clearly pinpoints the companies most at risk and those which are best placed to survive this period of uncertainty,” said Pattison. “It also sets certain business decisions in context, showing why job losses may be announced, for example. As the market slows towards the end of 2007 and the start of 2008, companies will use the time to focus on costs. But our analysis shows that the headline-grabbing decisions are only a small part of the story, regardless of the company involved.”

Plimsoll’s report does, however, highlight some encouraging signs. Jobs are being created in the fresh produce sector, mainly by 66 expanding companies looking to grow their workforce to cope with more business. This, says Pattison, is further evidence of where good management is creating confidence for the future.

The latest Plimsoll analysis assesses each of the 1000 largest companies on their most recent performance.

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