After a rough first quarter, Adidas Group has started implementing cuts that will cost about €100 million and another 500 to 600 jobs by the end of the year. The restructuring moves, which were accelerated due to the economic downturn, are meant to yield annual cost savings of more than €100 million.
The group has already laid off about 500 people at Reebok, Rockport and TaylorMade-Adidas Golf this year. The new job cuts will not entail any layoffs and they will chiefly target the Adidas organization, across all regions. At the end of last year Adidas employed nearly 39,000 people and the count had increased by about 24 percent, chiefly due to the opening of new stores.
Herbert Hainer, the group’s chief executive, stressed that there would be “no sacred cows,” and that “everything is on the table.” He said that Adidas was proving quite resilient to the current economic troubles but showed little optimism about the situation, saying that he did not see any upward movement in the economy.
The latest cuts will lead to the removal of the group’s regional structures in Europe and Asia, so that there will no longer be any layer between the global functions and the national units.
The teams around Roland Auschel in Europe and Christophe Bézu in Asia, jointly employing about 100 people, will be dismantled – although most of these employees will be offered other jobs in the organization.
The regional structure was put in place about 15 years ago to deal with the fast international growth of the Adidas group. However, the company’s managers deem it no longer useful because many subsidiaries have turned into large-scale businesses that would work more efficiently in direct contact with the global head office. The split of Europe into a few areas covering several countries will remain in place.
Another change is the launch of a global retail structure, following the recruitment of Michael Stanier as global retail manager earlier this year. With sales of about €1.8 billion last year and more than 1,300 stores, its retail unit is set to become one of the largest 250 retailers in the world and it wants to apply the same vertically integrated structure as the most successful players in the business.
There is unconfirmed speculation that the group may close Adidas America’s office in Portland, Oregon and group operations with those of Reebok at a new location near Boston. Meanwhile, the former Reebok office and warehouse in Elche, Spain is going to be closed at the end of this year to be merged into Adidas Iberia’s office and distribution center in Zaragoza. The measure will affect the 60 remaining employees of Reebok España, in which Adidas took over full ownership from Francisco Borja and his partners at the end of last year. They are being offered jobs in Zaragoza or big severance fees, but the unions have reportedly criticized the move. The 30 employees at Reebok’s global design center in Barcelona, which is now also the property of Adidas, will not be affected.