Thursday, July 25, 2024

How Dyson has ‘abandoned’ UK as it grapples with ‘huge competition’ from lookalike rivals: Experts say tech firm’s ‘devastating’ decision to slash 1,000 jobs was ‘not a surprise’ after new products struggled to take off amid relocation to Singapore

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Brexit billionaire Sir James Dyson sparked a major backlash when he decided to relocate his firm’s global headquarters to Singapore just three years after the referendum.

He defended the move and has always maintained Dyson is a ‘British company’. But it appears Dyson has turned its back on Britain again by cutting a third of its UK workforce.

The vacuum and air appliances manufacturer has announced that 1,000 staff from its 3,500-strong UK workforce will lose their jobs as part of a global workforce review.

Experts believe that the decision has not come as a ‘surprise’ as Dyson has seen increased competition from lookalike rivals, while some new products have struggled to take off in recent years.

Sir James was one of the most vocal business voices backing Brexit but moved the company to Singapore in 2019. He was critical of the last Conservative government’s growth plans and last year hit out at Rishi Sunak‘s ‘woeful’ science and technology policies.

Cuts at the vacuum and air appliances manufacturer, founded by Norfolk-born inventor Sir James Dyson (pictured), equate to almost a third of its 3,500-strong UK workforce 

Dyson's 1,000 job cuts are most likely to be felt at its HQ in Malmesbury (pictured), Wiltshire

Dyson’s 1,000 job cuts are most likely to be felt at its HQ in Malmesbury (pictured), Wiltshire

Sir James was one of the most vocal business voices backing Brexit but relocated to Singapore in 2019. Pictured: The Singapore HQ

Sir James was one of the most vocal business voices backing Brexit but relocated to Singapore in 2019. Pictured: The Singapore HQ

The 77-year-old has also criticised Labour’s economic policies, but it is understood the job cuts have nothing to do with the party winning a general election landslide. 

The company has bases in Malmesbury, in Wiltshire, London and Bristol, and staff were told about the latest developments in an email on Tuesday morning.

Professor Andrew Graves, a mechanical engineer and political scientist from the University of Bath, said industry insiders were not surprised by the move and ‘had been warning about this for a long time’.

He told the BBC: ‘Right across the world there is huge competition with the Dyson products and a lot of Dyson products really haven’t been successful of late.

‘They put aside two billion to build an electric car in Hullavington and that was withdrawn fairly quickly when they realised it was too difficult.

‘And also some of their latest products haven’t been too great in the market place, they are really fighting on all fronts at the moment.

‘This is a huge amount of cost-cutting,’ he added.

The professor said it would be ‘devastating’ for the town of Malmesbury if there were large scale redundancies.

Roz Savage, the new Liberal Democrat MP for the South Cotswolds, added: ‘It’s huge. Malmesbury is a close-knit community and I’m sure if people are in danger of losing their jobs then their pain is going to be felt by the whole community, by the local businesses and the local economy is going to be affected.

‘This is potentially very big news and I’m very concerned.’

Sir James (pictured at the Malmesbury base in 2002) has criticised Labour's economic policies, but it is understood the job cuts have nothing to do with the party winning a general election landslide

Sir James (pictured at the Malmesbury base in 2002) has criticised Labour’s economic policies, but it is understood the job cuts have nothing to do with the party winning a general election landslide

The entrepreneur was critical of Rishi Sunak's economic policies

The entrepreneur was critical of Rishi Sunak’s economic policies 

Dyson robot vacuum

Eufy robot vacuum

Dyson’s £1,200 robot vacuum cleaner (left) is being rivalled by alternative models including a £150 version by Eufy (right) in China

Dyson Chief executive Hanno Kirner said the ‘painful’ redundancies had been decided following a review of worldwide operations commissioned earlier this year.

He said in a company statement: ‘We have grown quickly and, like all companies, we review our global structures from time to time to ensure we are prepared for the future.

‘As such, we are proposing changes to our organisation, which may result in redundancies.

‘Dyson operates in increasingly fierce and competitive global markets, in which the pace of innovation and change is only accelerating.

‘We know we always need to be entrepreneurial and agile – principles that are not new to Dyson.

‘Decisions which impact close and talented colleagues are always incredibly painful.

‘Those whose roles are at risk of redundancy as a result of the proposals will be supported through the process.’

Sir James, fifth on the Sunday Times Rich list with a personal wealth of £20.8billion, donated £6million to fund a Malmesbury Primary School in January and last year announced plans to invest £100million in a new research and development hub in central Bristol.

During the pandemic, Dyson cut 600 jobs in the UK and a further 300 across the globe, saying purchase habits had changed.

It is understood that the decision to cut jobs was made before the general election was called.

Dyson shifted production to Malaysia 2002 and made Singapore its headquarters in 2019, but it has continued to base research and development efforts in Malmesbury.

Sir James modelling a hair dryer in April 2016 - one of a number of products his British firm has produced

Sir James modelling a hair dryer in April 2016 – one of a number of products his British firm has produced

On the face of it, Dyson is thriving as a business – with sales hitting a record £7.1billion last year. Earnings before interest, tax, depreciation and amortisation stood close to an all-time high at £1.4billion.

However, growth has slowed down in recent years. Between 2015 and 2019, revenues tripled from £1.7billion to £5.4billion. But in the following four years, they have risen at a steadier pace, climbing by a third.

This has come as research and development coasts have soared by 40 per cent last year, while the manufacturer spent big on new facilities including a battery plant in Singapore.

Dyson has also been impacted by low-cost Asian competitors. There are multiple cordless vacuums now available on Amazon, some even in the company’s trademark colours.

Sir James has always prided Dyson on its innovation, pioneering bagless vacuum cleaners in the early 1990s and the ‘stick’ design in the late 200s.

But in recent years, its ideas have come under scrutiny. In 2019, Sir James had to scrap a £500million electric car project after conceding it was not ‘commercially viable’.

Sales of Dyson Zone headphones (pictured) are not public but their retail price has dropped from £820 to £580

Sales of Dyson Zone headphones (pictured) are not public but their retail price has dropped from £820 to £580

It tried to bounce back the next year by saying it would invest £2.75bilion into areas such as AI, robotics and energy storage. 

It signalled a move to high-tech gadgets, including the Dyson Zone headphones, which feature an attached air-purifying mask. 

While sales numbers have not been made public, the premium Zone model is currently on sale for £580 – 29 per cent less than its initial £820. 

And it’s £1,200 robot vacuum cleaner is being rivalled by alternative models including a £150 version by Eufy in China. 

Dyson’s commitment to the UK as a major base for research and development is not thought to be affected by the job cuts, while the Institute – which provides undergraduate engineering programmes – will continue to be based at the Malmesbury site.

Sir James has been outspoken about the Conservative government’s policies. 

Sir James previously accused the Tory government of 'interfering' and 'penalising the private sector'

Sir James previously accused the Tory government of ‘interfering’ and ‘penalising the private sector’

He previously hit out at the Tories for taking a ‘short-sighted’ and ‘stupid’ economic approach, with too much red tape and high taxes. 

In January 2023, the tycoon said Britain was stuck in a state of ‘Covid inertia’ that was holding the economy back.

Sir James accused the Tory government of ‘interfering’ and ‘penalising the private sector’.

He also complained that the failure to get workers back to the office after the pandemic has ‘badly damaged the country’s self-belief and work ethic’. 

Writing in The Daily Telegraph, Sir James said: ‘The Government seems intent on moving in the opposite direction with the introduction of suffocating regulation, greater interference with business, and thinking it can impose tax upon tax on companies in the belief that penalising the private sector is a free win at the ballot box.’

He warned: ‘This is as short-sighted as it is stupid. In the global economy, companies will simply choose to transfer jobs and invest elsewhere.

‘Our country has an illustrious history of enterprise and innovation, born of a culture which we are in the process of extinguishing.’

The entrepreneur also praised the aggressive, tax-cutting economic policies of former chancellor Kwasi Kwarteng and former prime minister Liz Truss. 

The pair’s disastrous mini Budget resulted in both senior politicians ultimately losing their jobs weeks after entering office.

‘I’m disappointed we’re not going for growth,’ he said this year.

‘I was hopeful (with Ms Truss and Mr Kwarteng). I thought they were doing the right thing – I’m the only one who did.

‘Kwarteng wasn’t raising taxes. He was going for growth, which I think is the right thing. It allows us to pay for things and generates wealth.’ 

Sir James is said to have had a ‘fiery’ meeting earlier this year with former Chancellor Jeremy Hunt, who reportedly told the entrepreneur: ‘If you think you could do a better job, why don’t you stand for election?’

The businessman was knighted in 2007 for services to business.

He received fierce criticism in 2019 after announcing the firm’s global headquarters were moving to Singapore from the UK, but defended the move, saying: ‘It would be arrogant to think that we could design and develop products for Asia and Britain.

‘We can develop technology, but understanding what Asians want and what works in the market – we have to be there, we have to be immersed in it.

‘I can’t make things here and bring over all the components from the Far East here, assemble them here and then send them back to the Far East. That just doesn’t work.’

Sir Dyson also reaffirmed the company’s commitment to Britain.

In an interview three years ago, as the UK emerged from the Covid pandemic, he said: ‘We’re a British company – I’ve put a lot into this country.

‘I’ve invested about £2 billion on this site’, he said. ‘I’m taking on more people, I employ 4,000 people here, I pay a large amount of tax here.’

Dyson, which was founded in 1991, played a key role during the pandemic, working with scientists and Cambridge-based Technology Partnership, to produce 10,000 ventilators for hospitals across the country.

It announced shortly after Covid hit that it would cut 600 jobs in the UK and 300 more in rest of the world due to the impact of the virus.

The company, which employs 14,000 people globally, said impacted staff were in retail and customer service roles, adding it was working to redeploy people to alternative jobs where possible.

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