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August 01, 2008
“Employers skim the creme de la crema”
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Skilled workers retrenched by Starbucks have a good shot at gaining another job, but it's grim news for retail landlords and older staff made redundant by Don smallgoods, Fiona Smith and Lisa Carapiet write.
Within minutes of hearing this week that Starbucks will be closing two thirds of its Australian outlets,other employers were working the phones to find out how they could offer jobs to the 700 redundant staff. A representative of the American coffee retailer said she was surprised and heartened by the swift response of the business community, which sees Starbucks' loss as their own potential gain. Baristas - the people who turn a cup of coffee into a designer beverage - are in high demand even if the Starbucks product was not desirable enough to keep 61 of its stores afloat.
There is a growing trend of employers leaping to catch retrenched staff - a sign that skills are in short supply. Earlier this year, BHP Billiton and labour hire company Skilled Group put their hands up to employ some of the 930 direct and 280 indirect employees of Mitsubishi's closed car-making operations. Good, experienced retail staff are also in short supply. On average, 70 per cent of people working in a store will resign each year, which imposes huge hiring and training costs, especially since the sector is populated mostly with young people starting out in the workforce.
Hotel group Accor Asia Pacific raced to try to be first in the pick up Starbucks employees. Accor's vice president Australia, Simon McGrath, says he'll be surprised if the group isn't able to employ up to half of the Starbucks' staff in the next two to three months.
"I am pretty confident," he says. "This is an opportunity to keep these people in hospitality and not lose them to another industry."
Like retail, the hospitality industry has to manage high staff turnover rates (40 per cent each year), he says, largely because the nature of the students and backpackers who are just "passing through" on their way to another career. Accor - which has the brands Sofitel, Mercure, Novotel, and Ibis - has hotels in most of the locations affected by the Starbucks closures.
However, the 400 staff at meat¬processing company Don KRC are unlikely to be so lucky, according to outplacement provider HR Solutions, which assists employees who have been retrenched. Don is closing its two plants, in Melbourne and Perth, and its employees, who are long-term process workers, are less likely to have skills in high demand elsewhere, says HR Solutions owner Bruce Gregory. "They haven't been in the job market for a long while," he says, adding they may have to move to another location or retrain for another career.
Victorian Premier John Brumby has warned that his state is entering its toughest economic climate in 15 years, but is well placed to overcome the global financial pressures. A further 130 redundancies are expected when a sawmill at Dartmoor, in the state's far west, closes. "There are always ... changes in global economic conditions and Victoria and Australia are a small part of the world economy," he says. "So the best thing we can do is get our fundamentals right and that's what we're doing."
While Don and Starbucks staff consider their options, some of the biggest retail landlords have been sent into a tailspin after the coffee company yesterday named the 61 "underperforming" stores that will close nationwide by Sunday. As the company does not franchise, it is understood that the leasing agreements are in Starbucks' name. Starbucks is closing all eight stores in Tasmania, South Australia and the ACT and keeping 23 stores open across Sydney, Melbourne and Brisbane. Starbucks' biggest landlord, Westfield Group, looks set to negotiate the termination of 10 leases with the coffee corporation, leaving two outlets open at Westfield in Mount Druitt, NSW, and in Chermside, Queensland.
A spokeswoman for Westfield said the group's leasing team was continuing to work with Starbucks with regard to vacating space. The chief executive of Lend Lease Retail and Communities, David Hutton, confirms the company has "received notification of Starbucks' intention to close their stores located in Lend Lease shopping centres, and we are' in discussions with them".
All three of Lend Lease Retail's leases with Starbucks - at Sunshine Plaza in Maroochydore, Queensland, as well as Macarthur Square and Erina Fair in NSW - will end. Stockland's shopping centres at Burleigh Heads in Queensland and at Glendale and Shellharbour in NSW also have Starbucks shops which are to close. "It is business as usual at Stockland shopping centres as Stockland works with Starbucks management to resolve the matter," a spokes¬woman from Stockland says.
with AAP
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