After The Cull
Every time there is a jobs cull of non-management operatives by one of the large blue chip UK companies, there is a storm in a teacup / kerfuffle in the mainstream media.
And it is always the case that not only is it the newswires who get the perspective wrong, so do the politicians. Right leaning politicos wheel out issues of the state of the sector in question, Brexit, or the policies of previous Governments. Those on the left- the Unions / Labour want businesses to be run as charities.
Yielding To Shareholders
However, the truth here is that listed companies are beholden to their shareholders (allowing for gravy train / fat cat executive remuneration) and the dividend payments are the sweetener. You will be hard pressed to hear anywhere that BAE is giving people the sack in order to afford to keep paying a 3.5% yield.
Corporate HR Double Speak
In the case of BAE Systems today, the defence contractor has come up with all kind of corporate HR double speak regarding the loss of 2,000 jobs. The reason is allegedly “boost competitiveness, accelerate technology innovation and improve operational excellence”. This is the kind of sentence which is like a compilation of the kind of empty phrase one sees at Party Conference. Interestingly enough, the BAE announcement came in just after the car crash Tory conference?
From a stock market perspective it is usually the case that job losses, as with CEO resignations, are a buying opportunity. One notes the way there has been a recovery in the BAE Systems share price since mid September – presumably not on the basis of any leak of the cull announced today. If there is anything to highlight here it is the way that BAE Systems has effectively flagged today the way that it requires a rethink of its place globally, given the way that it stands little chance in a world dominated by US giants. Sacking people in order to afford a dividend payout is only a temporary sticking plaster.
Zakmir.com is a purely journalistic website – Zak Mir is a member of the NUJ. There is no intention here of providing financial advice and absolutely no interest in speculating in any of the companies mentioned. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything written here.