Consignia Chief to Leave Post as Losses Mount

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Dr. Neville Bain, chairman of Consignia -- the parent company to the British post office -- will step down when his contract runs out at the end of the year, Patricia Hewitt, Trade and Industry secretary, told members of parliament last week.


"The service that is being provided by Consignia at the moment is simply not good enough," Hewitt reportedly told the members. "I do expect the management and the unions who have been asking for years for greater commercial freedom now to work together to use the commercial freedom that we have given them to deliver a better service to customers."


John Roberts, Consignia's chief executive, agreed there was a pressing need for productivity gains within the organization. "The key signal from the results is that our costs are running ahead of income," he said. "We have got to improve efficiency if we are to return to profit."


Consignia -- which includes The Royal Mail, Post Office and Parcelforce -- reported last month that pre-tax losses for the 26 weeks ending Sept. 23 more than doubled to $398.5 million compared with losses for the same period last year.


Consignia had recently announced that it would look to save $1.7 billion by April 2003, equivalent to a 15 percent reduction in its cost base.


Structural changes were urgently needed for the parcel shipping division, Parcelforce Worldwide, Bain said.


"We are determined to take the action necessary to give Parcelforce Worldwide a profitable future," Bain said. Insiders said that this would probably include job cuts, which may come over the next 18 months.


Consumer watchdogs called for Bain's dismissal last week after it announced its first-half performance.


Of the financial results, Peter Carr, chairman of Postwatch -- a consumer watchdog body for the UK postal industry -- said, "surely the time has come to review the future of the Consignia leadership following yet another set of appalling results.


"This is a plc and the normal rules are that consistent failure results in shareholders demanding change at the top," Carr said. "What we are seeing are consistently bad results with no real light at the end of the tunnel. What we need is innovation, creativity and a change of culture, and that normally requires a change of leadership."


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