Telecom redundancies

March 23rd, 2013 at 3:00 pm by David Farrar

Stuff reports:

yesterday declined to scotch claims by Labour communications spokeswoman Clare Curran that as many as 1500 of its 7600 staff could lose their as a result of a restructure first announced by Telecom chief executive Simon Moutter last month.

Telecom spokesman Andrew Pirie said that while job reductions would occur across the board at Telecom, many of the cuts would be to middle management functions in administrative areas such as finance and human resources. …

Even Telecom had been through bigger changes before, he said. That included a plan to shed 5200 staff over four years that was announced in 1993 when Telecom employed about 12,500 people. Prior to its demerger from the Post Office it employed 26,000. Businesses such as the railways had also been through more dramatic changes, he said.

A Telecom manager once joked to me that Telecom wasn’t so much a telecommunications company as a law firm that specialised in telecommunications.

This was in recognition of the fact that much of the actual technical aspects are done by contractors such as Alcatel-Lucent and Yahoo.

Telecom for many years made money through its grip on the monopoly copper lines. We were not well served by that regime.

David Cunliffe and Steven Joyce broke up that monopoly, first by operational separation and then structural separation. Chorus, the monopoly element, is now a separate company.

It has been inevitable that the Telecom of the future would be a different beast. it needs to be a nimble, efficient risk taking competitive company as it now fairly competes against Vodafone and 2 Degrees, plus many minnows.

They have been moving towards this. Their flat rate data roaming rates were a bold move that should win them market share. Their XT network provides so much better coverage than Vodafone, that I swapped over. They are in an environment where you have to work hard to both gain and retain customers.

Such a regime serves us consumers well.

It also means that Telecom’s historic over-staffing (have a look at their rival’s staff numbers) will be dramatically pruned. And for the staff affected, and their families, it is traumatic and awful.  Losing a job, even when you are performing well, is gutting. So on an individual level, those affected have my sympathy.

But at a macro level, these changes are not a bad thing. Our country and economy prospers when companies becomes more efficient, and consumers have choice and competition.

8 Responses to “Telecom redundancies”

  1. Brian Harmer (688 comments) says:

    A variation on the famous quote by Stalin, “a single death is a tragedy, a million deaths is a mere statistic”?

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  2. kowtow (13,220 comments) says:

    Not so sure that this isn’t a bad thing.

    Efficiencies are fine but do we the customer get better and cheaper services when New Zealanders are sacked by a company that tries very hard to pretend it is a New Zealand company but then employs legions in India or the Phillipines?

    Meanwhile it always appears to be the fat cats at the top of these “efficient corporates ” who do phenominally well no matter how shit the company performs.Good work if you can get it.

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  3. Johnboy (20,828 comments) says:

    Labour, as the supporters of the cloth-capped, blue-collared folk, should be applauding the sacking of the drones that comprise middle (or any sort of) management! 🙂

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  4. youami (45 comments) says:

    A lot of the job losses from Gen-i (Telecom’s IT arm) are due to the loss of a number of large clients (ACC, MOJ,
    Commonwealth Bank of Australia). The majority of employees that worked on these accounts have either picked up work with the new providers (Fujitsu, Datacom) or will pick up work with them soon. That’s the way IT works… the work is still there, just with a different provider. On top of that, there are many middle-managers, project managers and the like in Gen-i, that either add no value, or even reduce value for the client (read: are crap) in my experience as a recent former employee. Frankly, they deserve to be made redundant.

    Labour’s scare-mongering on this is just pathetic. What would they suggest the government do? Bail Telecom out so that they can keep employing people that provide no value to the company?

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  5. youami (45 comments) says:

    Large clients they have lost, that is.

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  6. Akld Commercial Lawyer (166 comments) says:

    I think the way this issue has been raised is appalling and signals (to me at least) that there are no rules (and worse still no common sense) being exercised in the Labour caucus. I am not sure how this has come about as there is enough institutional memory from people who have, themselves, been Cabinet Ministers in recent times. It was suggested to me, having belatedly heard the Morning Report interview on Friday morning, that such is desperation for media airtime that reason has gone out the window. I cannot comment on that, but the Nat Radio interviewer tried to ask the right question – namely what is this strategy for ensuring full employment in the Telco / IT sectors. There was, of course, no answer – I could be rude and venture a reason (well, three reasons) for that. But, instead, I think I prefer to say that if you have aspirations for (one day) occupying the Cabinet office – there are some lessons that need to be learned.
    It is not without reason that experienced politicians in any democracy with a functioning and credible stock exchange don’t declare open season on listed corporates.
    Part of the answer is the risk of being caught up in allegations of simply being a patsy for someone shorting the market (short-selling). I won’t go further – there is no evidence to suggest that what is happened here but wiser heads understand the meaning of the old adage about “buy on rumour, sell on fact”.
    Next, under continuous disclosure rules, a listed corporate has a duty to ensure that a ‘false market’ in its shares does not develop as a result of rumours. There are two side to this coin – first, if the rumours are accurate then some in the market could be said to have an advantage. Secondly, if the rumour is false, a failure to correct it could contribute to it gaining currency.
    Market experience is that there is a duty to respond to credible rumour. As this is a political blog, I will leave open whether silence is a signal that the powers that be don’t regard it as such. Instead, as I noted at the outset, the reason why a listed corporate is in such a difficult position with this sort of (poor) behaviour is that if it responds to one such leak – there is a risk that a pattern could emerge.
    You can take it from this, that my view is that the caucus should have rules which should be followed, that members do not “go off on one” about a listed corporate and thereby bring the entire market into disrepute. For example, something over 400,000 voters have signaled that they might be prepared to express some confidence in the local capital market. Surely, even if you were philosophically opposed to that move (as a good percentage of this who have expressed interest may well be) it doesn’t take more than a phonecall to a grownup to realise that undermining one of the key planks of the framework by which NZ business raises capital to grow, employ people, and create wealth itself isn’t in the interests of the entire community.
    Then there is the credibility issue. A demonstrated penchant for media beat-ups based on some dodgy data and a complete lack of a credible strategy isn’t going to engender confidence (by anyone). I could go on….
    And then, as DPF has pointed out, there are the folk who are caught up in this process. Change is unsettling. How does feeding the rumour mill based on unsubstantiated and (based on the radio silence) possibly quite inaccurate leakage help those wondering what comes next?
    Market disciplines are based on a number of assumptions. The appearance of a complete absence of any commonsense or discipline – and a willingness to torch anyone or anything for a sound bite speaks volumes.

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  7. Reid (21,429 comments) says:

    Market disciplines are based on a number of assumptions. The appearance of a complete absence of any commonsense or discipline – and a willingness to torch anyone or anything for a sound bite speaks volumes.

    Commercial Lawyer, thank you for your insights and they are appreciated and I hope we see more from you. I have to say however you seem not to understand the length to which lefties are prepared to go to gain and retain power.

    They don’t give a damn if they wreck the capital markets, they don’t give a damn if they destroy a company. For they see both as evil. The only thing they give a damn about is scaring the horses so the scared horses will turn to them because they care.

    The fact Liarbore politicians have recently been in power therefore understand they in fact aren’t free agents but are beholden to all sorts of constraints for all sorts of extremely good and inarguable reasons, is neither here nor there, to them.

    This is because lefties are fanatics. They are.

    When the Gweens get into power for example, I guarantee they will seek to review the Five Eyes agreement and dismantle the only thing that has kept NZ at the top table in international politics, because it goes against their [incredibly naive and unworkable] way of thinking.

    Liarbore are no different, in philosophy. In degree, yes, but in philosophy, no.

    All you have to do to realise this is look up from your law books and look at the world as they operate in it.

    Sad to say, but there we are.

    This is NZ, in 2013 and for the foreseeable future. Expect more of the same, from them.

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  8. joana (1,983 comments) says:

    Some of the men made redundant in previous telco redundancy rounds still do not have full time work..The whole industry is controlled by an old boys network. If you are not in with them , you won’t get employed in the industry in NZ..Wiser ex telco people went to Aussie..Prior to that lot of redundancies , many NZ workers had to train the cheap Filipino workers who replaced them.
    Can someone bring the latest scam re Filipino workers to David’s attention..It is in today’s Press.

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