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Dubai state conglomerate cuts jobs as it downsizes - Naveed Yaseen - 10-16-2009 07:37 AM
DUBAI: The deeply indebted company controlling many of Dubai’s prized state-owned businesses said on Thursday it has cut 15 per cent of its work force in a restructuring effort that is nearly complete.
Dubai World, a conglomerate whose businesses range from building islands and running US luxury hotels to hauling cargo off ships worldwide, said the reorganization should save it $800 million over the next three years.
“Our diverse portfolio of assets provides us with an exciting and compelling future,” Chairman Sultan Ahmed bin Sulayem said in an emailed statement. “With the reorganization, the group enters this next vital phase of our evolution better able to withstand all economic eventualities.”
Dubai World counts fewer than 70,000 employees around the world following the job cuts. The layoffs fell especially hard in the United Arab Emirates, where a quarter of the company’s employees lost their jobs.
Most of those cuts came in the hard-hit real estate sector, which has seen property prices in Dubai plunge by half from their peak last year.
The company would not provide details of its global workforce before the layoffs, but the size of the reduction suggests at least 12,000 employees lost their jobs.
The moves have left the company “now more appropriately sized” for the current economy, Dubai World said.
The downsizing included merging some operations and forcing each remaining division to lay out “a clear strategy in line with its specific area of expertise,” the company said.
Property divisions such as a vast partially built cluster of high-rises known as Jumeirah Lakes Towers have been grouped together under the umbrella of real estate arm Nakheel, for example.
Shopping centers with names like Ibn Batutta Mall and Dragon Marthave now been moved out of the property division and into a new subsidiary dubbed Retail corp World.
Dubai is one of seven semiautonomous sheikdoms in the UAE federation. The federal capital of Abu Dhabi controls nearly all the country’s oil wealth.
The city-state has grown its economy largely by focusing on industries such as trade, tourism and financial services. Dubai World and a handful of other government-owned companies were the engines driving much of that growth.
The expansion did not come cheap. Dubai World has said it now owes nearly $60 billion in debt.
Most pressing is a $3.5 billion Islamic bond issued by Nakheel, the builder of the city-state’s archipelago of man-made islands in the Persian Gulf, that must be repaid or refinanced within two months.
Besides Nakheel, Dubai World runs global port operator DP World and investment firm Istithmar, the owner of upscale retailer Barneys New York.
The conglomerate also owns high-end hotels including New York’s Mandarin Oriental and the Fontainebleau in Miami Beach, and part of performance company Cirque du Soleil.
It and casino operator MGM Mirage, in which it also owns a stake, are building the $8.5 billion City Center project on the Las Vegas Strip.
http://www.thenews.com.pk/daily_detail.asp?id=203360