Holland Casino warns of “radical” cost-cutting measures as debt hits €100m4th October 2013 9:32 am GMT
Willem-Jan van den Dijssel, chief executive of struggling state-owned gaming operator Holland Casino, has said that the company must reach agreements with workers’ unions to reduce personnel costs by 18 per cent by November 1st in order to keep the business afloat.
In an address to staff, van den Dijssel admitted that the company’s debt had increased from €60m to €100m as a result of increased losses, costs associated with reorganisation and necessary investments. As a result, Holland Casino “directly depends on the banks” which he said were demanding “more security in the form of cost reductions”.
While he said the banks supported the operator’s strategy “in principle”, it had set the November 1st deadline for management to make “additional structural cost savings” which van den Dijssel said would only be possible through cuts to personnel costs, which account for 60 per cent of total costs.
“I do not want to discuss details, but as management will present drastic proposals, I want everyone to understand the urgency of the situation,” he explained. “It is not pleasant, it may feel unfair and yes it will hurt, but radical choices are inevitable.”
While van den Dijssel did not elaborate on the exact amount of cost reductions, spokesman Huug Brinkers of trade union De Unie told a Dutch radio news programme that the company had revealed plans to cut €36m in labour costs, which he described as “asking way too much” of union members.
This would see 130 employees laid off, with a company-wide 5 per cent wage cut if the target is not met, while all performance-related bonuses would be cancelled, and new employees offered lower starting salaries. It would also include a decrease in holiday allowance, no paid leave, higher pension contributions and reductions in days off for senior employees and days in lieu.
Brinkers claimed that the cuts would in effect amount to a 20 per cent salary decline for every Holland Casino employee, though a spokesperson for the operator denied this, saying the effects would differ depending on each staff member’s role.
“We question the management’s professionalism,” said Brinkers. “The path they appear to choose to go now is the path of least resistance. Obviously, cost awareness is important, but you cannot ask this of employees.”
According to van den Dijssel however, if the business is not able to agree on a series of cuts by the agreed deadline “additional job losses are inevitable”, and could even see the banks lose trust in the organization, call in its debts and force the company into bankruptcy.
He justified the company’s position saying that an independent review commissioned by the Dutch government had deemed Holland Casino’s strategy to be sound, but with its results “not guaranteed”, the company had to protect itself by making cuts.
He said that the unions had been given access to all relevant information, including confidential documents, and called on them to engage with the banks and the Dutch secretary of state on the matter.
“In spite of this gloomy picture, we are still in charge ourselves,” he said. “The banks will only step in if we cannot work this out between ourselves. I realize that this is asking a lot, but if we can work this out, we can look forward to a healthy future for Holland Casino.”
Despite the impending introduction of online gaming regulations in the Netherlands, Holland Casino has struggled badly with competition from online competitors, with former chief executive Dick Flink resigning in June after an extensive restructuring of the business failed to prompt an improvement in financial results.
The company was also embarrassed by a failed tender process for an online gaming software partner, after an RFP was issued, cancelled, then reissued with no bidder having met the conditions required.