Maersk Line cuts up to 3,000 jobs

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10 January 2008

Maersk Line is launching a new strategy in search of a way back to growth. Thousands of employees to be fired.

The world’s biggest shipping line, Maersk Line, announced January 8, that the company is about to lay off between 2,000 and 3,000 out of the 25,000 employees. It is the biggest layoff in the 104 years of the Danish A.P. Moller-Maersk group.

”The reality is that a leaner and simpler business requires fewer people and this means there will be fewer positions in Maersk Line, mainly in the middle management layer,” Eivind Kolding, CEO, Maersk Line, says.

Problems since 2005
A.P. Moller-Maersk has been suffering from serious problems since the takeover of Dutch shipping line P&O Nedlloyd in 2005.

Maersk Line lost 568 million dollar in 2006 and made only a small profit in 2007. The shipping line is looking for a drastic change in order to defend its no. 1 position on the global market.

According to Danish newspaper Berlingske Tidende, sources inside Maersk Line states that there is more to come: Between 5,000 and 10,000 jobs may be cut the next three years.

The layoffs are therefore part of a new company strategy called StreamLine.

According to the company, the elements of the strategy are:

- Filling the ships with profitable cargo
- Provide the most reliable product demanded by the customers
- Provide a faster, more responsive service closer to customers
- Reduce complexity and cost

Basic mistakes every day
In December last year Eivind Kolding made it very clear just how serious the situation is for Maersk Line:

"We don't even manage to do the basic things right. Nearly 50 per cent of our
containers are more than one day late and more than 20 per cent of our bills are
not correct," Kolding said.

Due to these problems Maersk Line is losing positions on a global market which is growing with ten per cent annually. Another negative factor is the struggling US economy.

In just three months the A.P. Moller-Maersk shares have fallen 20 billion dollar and the company has lost one third of its market value.

I June 2007 former CEO of containers, Knud E. Stubkjær and group CEO Jess Søderberg were replaced in Maersks top management because of the problems.
Nils Smedegaard Andersen is now group CEO of A.P. Moller-Maersk.

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