Job cuts to be made across group to position for downturn but acquisitions still considered
Towergate is set to slash its 3,500-strong workforce by up to 10% over the next two years, Andy Homer, its chief executive, has revealed in an exclusive interview.
Homer said the cuts would be made business by business across the group, as it positioned itself for the economic downturn.
He said that the group’s individual broking branches were already being asked to produce three-month business forecasts, and their costs would be assessed accordingly.
Homer said: “The business is changing its shape. We’re shutting down things that weren’t working or were deficient, and are growing it in other parts. We employ 3,500 people and I expect that to come down by 5 to 10% over the next two years. The trick is for all our businesses to determine how they’re doing and to cut their costs accordingly.”
Homer added that Towergate’s senior management would not take a bonus this year – for the second year running – and the group’s annual executive conference in Portugal had been relocated to Maidstone. He said there were no plans to reduce working hours or encourage staff to take unpaid leave, as fellow brokers such as Willis have done, but individual managers might ask to do so. “Any of the businesses could say to me, Andy, rather than lose head count, can we cut working hours? We’re not going to come out with an overall policy because some of our businesses are growing and hitting their profits. Each of the businesses has got its budget.”
In a wide-ranging and revealing interview, Homer warned that the recession was likely to last well into 2010. “The economy is a really, really serious threat and will put businesses under stress,” he said. “Smaller and more agile businesses will survive, some of the bloated businesses will struggle.”
Homer said that he and Peter Cullum, Towergate’s executive chairman, had shelved plans to retire from the day-to-day running of the business because of the state of the economy.
He insisted the consolidator model had a healthy future, and said Towergate would still look for good value acquisitions. He said another transformational acquisition, such as that of Open GI or Broker Network in 2007, was unlikely.
Homer would not rule out selling any of Towergate’s businesses, though he said there were no current plans to do so. “If Towergate had a knock-out offer for one of its businesses, we would seriously consider it,” he said.
Read the full interview: Andy Homer