Dark clouds gather over Norwich as Aviva announces cuts
PUBLISHED: 10:57 06 June 2019 | UPDATED: 11:00 06 June 2019
The threat of cuts at Aviva's office in Norwich is a devastating blow not only to the workforce but the whole city. Here business editor Richard Porritt asks 'how did Aviva get in this mess?'
It might be early summer but a very big, black cloud has arrived over Surrey Street in Norwich - and it is set to hang around for some considerable time.
Aviva - formerly Norwich Union - has announced it is to embark on a huge cost cutting exercise. And chillingly, 1,800 jobs face the axe.
There was shock at the Surrey Street offices - where around 5,000 people work - after the announcement.
MORE: 'We don't know anything': Aviva staff in the dark over 1,800 job losses
And now staff face weeks of uncertainty - sources say company bosses are not planning to update employees about what happens next until July.
But how could this have happened? How does the UK's biggest general insurer find itself in a position where drastic action is required to - in the words of new chief executive Maurice Tulloch - cut costs to stay "competitive"?
Mr Tulloch took over in March and it was clear from the beginning some changes were needed. But few would have predicted the extent of cost cutting required.
He has declared war on the firm's "complexity" saying in his statement as the stockmarket opened: "I am determined to crack Aviva's complexity, an issue which has held back our performance for too long. Today's changes will begin to reduce complexity, cost and duplication, enabling Aviva to be better at serving our customers and delivering stronger results for our shareholders."
So are these proposed job losses a necessary requirement for a firm in desperate need of change? Or is there a deeper problem taking root at Aviva?
The firm may well be a victim of it's own success. Strong performance over a prolonged period can lead to a company becoming bloated.
If Mr Tulloch wants to trim the flab then perhaps the vast majority of those job cuts can happen naturally - by those seeking redundancy or simply leaving the business and not being replaced.
Maybe new technology can be used to drive efficiency across the firm?
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But the fear remains that Aviva will look to scale back its work in a certain area of the business. That could lead to the loss of hundreds of skilled jobs - and Norwich and Norfolk has already been hit hard in the past few years.
The insurance industry - like every other - is changing. And firms that do not embrace change face the unthinkable.
Staff at the Norwich office - and their families - will suffer a worrying few weeks. That cloud will hang over them for some time yet.
Let us hope Aviva's bosses handle the changes in the correct manner. And for the sake of the people employed in Norwich let us hope these changes can be enacted without any enforced cuts in Norfolk.