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Contracts cut
Page 6
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• Christian Salvesen is axing 21 contracts with smaller clients this month because they are no longer profitable.
Letters sent out by the company's industrial division gave clients two months to find an alternative operator, or agree to a substantial increase in rates.
The disclosure comes in the wake of Salvesen's 30% fall in pre-tax profits (CM5-11June).
A spokeswoman for the company says 25 companies received such letters, although together they account for less than 1% of its annual turnover in the UK.
The majority of customers were small and their contracts amounted to below £25,000 each. Four decided to stay on with Christian Salvesen under renewed terms."
She denies that the move is in any way connected with the imposition of the Working Time Directive in 2005 and the associated rise in labour costs,
1-he process is perfectly usual and is called 'bottom slicing". All they have done is a routine business analysis, identifying accounts that are no longer functioning profitably."
She adds that the loss of a contract to manage House of Fraser's warehousing and distribution was unconnected with the process.
This has been won through a competitive tender by Exel, which will take on Salvesen staff based at the retailer's distribution centre in Milton Keynes.
• guy.sheppard ®Nueyonder.co.uk