Company Profile Moulinex S.A Address: 11, rue Jules-Ferry BP 45 93171 Bagnolet Cedex France Telephone: (33): 01.41.99.41.99 Fax: (33) 01.43.34.32.10

Statistics:
Public Company
Incorporated: 1953 as Société d'Etudes Chimie et Mechanique Légumex
Employees: 8,400
Sales: FFr7.69 billion (1996)
Stock Exchanges: Paris
SICs: 3634 Electric Housewares & Fans; 3631 Household Cooking Equipment; 3635 Household Vacuum Cleaners; 3639 Household Appliances, Not Elsewhere Classified

Company Background
Moulinex is a French brand of small electrical appliances and kitchen equipment and is owned by Groupe SEB. Moulinex was originally established as a company in 1937, however at the beginning of September 2001, Moulinex declared bankruptcy.
Moulinex was the company that originally designed the Mouli grater. It became a household name through its kitchen blenders and appliances - the first of which it launched in 1932.
It also enjoyed great success in the US when it began making microwave ovens in the 1980s.
But the company was hit hard by the emerging market crises in Asia and Russia, which caused sales to plummet and competitors to cut prices aggressively.
Its losses for the first half of the year tripled to 213 million French francs, or $32.8 million, on a 2.9 percent drop in sales, to 3.3 billion francs. The declines were attributed to weakness in emerging markets like Brazil and Russia, and slow demand in developed countries.
The employee buyout had become a trap. As the recession took hold, sales collapsed and profits disappeared, reducing Moulinex to nearly five years of losses. Yet the company was paralyzed from taking the most necessary steps: drastic cuts in payroll, the closing of a number of its outdated factories, and the stepping up of the automation of the remaining production activities.
The trade unions played an essential role in enabling the breakup of Moulinex. After the company had announced it was bankrupt there was considerable unrest among the workforce.

Products of Moulinex Coffee maker Food processor BlenderMicrowave oven

Rice cooker

EASY MAX COMPACT

Case in Brief * Bankruptcy of Moulinex * France’s governments reaction & aversion to layoffs * France’s anti-layoff Labor law’s & labor unions * Growing worry at corporate France that they lose their competitiveness * Europe faces its steepest downturn in nearly a decade * French chief executives letter to Prime Minister Lionel Jospin’s * German governments open-minded mentality towards layoffs * Necessity of layoffs in European countries

Problem Statement
As the whole world face, the financial recession to stay competitive companies need flexibility to trim their payrolls especially now that Europe faces its steepest downturn in nearly a decade. However, in some countries like France where government traditionally have been a layoff averse face bankruptcy due to their no-layoff policy.

Questions to be answered
Q.1 Although no one likes to hear about companies laying off employees, are layoffs necessary?
Q.2 What are some of the negative outcomes of a no-layoff policy?

Answer to the questions
Ans.1 Layoffs are necessary in order to 1. Reducing production cost 2. Reducing operating cost 3. Keeping normal flow of profit 4. Minimizing temporary losses 5. Improving quality of employees 6. Increasing market share 7. Adjust to the new market size
Ans.2 Negative outcomes of no-lay offs 1. Increasing Production cost 2. Increasing operating cost 3. Profit fall 4. Increasing credit/amount of loan 5. Fall of market share 6. Increasing product price 7. lose customers

Recommendations
Layoffs are not necessary if the following steps are taken 1. Restructuring a strategy that regards people as costs to be cut, 2. A responsible restructuring strategy focuses on people as assets to be developed. 3. This focus recognizes that people are the source of innovation and renewal, especially in knowledge-based organizations. 4. The development of new markets, customers, and revenue streams depends on the wise use of a firm’s human assets.

If layoffs are necessary 1. Be sure that employees perceive the process of selecting excess positions as fair, and make decisions in a consistent manner. 2. Make special efforts to retain the best and the brightest, and provide maximum advance notice to terminated employees. 3. Many employers are cautious about laying off too many workers, only to find themselves scrambling to refill the positions when demand picks up.

Conclusion
The majority of the layoffs that have taken place during this recession—at financial-services firms, retailers, technology companies, and many others—aren't the result of a broken business model. For many managers, these actions feel unavoidable. But even if downsizing, right-sizing, or restructuring is an accepted weapon in the modern management arsenal, it's often a big mistake. In fact, there is a growing body of academic research suggesting that firms incur big costs when they cut workers. Some of these costs are obvious, such as the direct costs of severance and outplacement, and some are intuitive, such as the toll on morale and productivity as anxiety infects remaining workers.