The salary of employees payable will decline, and the layoffs and salary cuts in the home building materials industry may continue

Big material research, chief analyst: Deng Chaoming, pan-home boss business internal reference, manager daily reading, dealer manager business counselor, shopping guide practical strategy

In a difficult market environment, layoffs and salary cuts are often common responses.

In particular, non-critical positions, some alternative employees, and long-term loss-making business lines are more likely to be eliminated.

Since 2022, the home building materials industry is in this situation, although the layoffs and salary cuts have not caused an uproar, and even there are not many followers, but after careful combing, you will find that this phenomenon has appeared on a large scale.

The latest set of data is that the official micro-push of the Zhejiang Furniture Industry Association in the first half of 2023 operation data, according to the statistics of the Zhejiang Provincial Department of Economy and Information Technology and the Provincial Bureau of Statistics on 1,144 enterprises above designated size in the province, the average number of workers employed was 170,800, down 14.2% year-on-year; Compensation payable to employees amounted to MOP 7,245 million, down by 12.7% year-on-year.

As one of the largest furniture producing areas, Zhejiang's competitive advantage is relatively strong, and there has been a double decline in the number of workers and the salary payable to employees, and the situation in other production areas is difficult to be optimistic.

Looking back on 2022, layoffs and salary cuts have appeared in the financial reports of many listed companies.

According to Fangcai China's compilation of the layoffs of 90 listed building materials and home furnishing companies in 2022 and the salary list of chairmen of listed building materials and home furnishing companies, 60 companies will have layoffs in 2022, accounting for more than 66.67% of the reduction of enterprises and reducing the total number of employees by 31,432.

Leju Finance's "Home K Line" counts the number of employees of 95 listed home building materials companies in 2022, nearly seventy percent of them have laid off employees, reducing the total number of employees to 51,115, and 29 are increasing their employees.

Among them, Jiayu Co., Ltd., ST Guangtian, Ashtronics, Diou Home, Zhongyuan Home, Mulinsen and other enterprises have a reduction ratio of more than 30%. In particular, Jiayu shares have a reduction rate of more than 50%.

There are also some enterprises where the proportion of attrition is not high, but the employee base is large, making the number of attrition very large.

For example, companies such as Mulinsen, Shangpin Home Delivery, Macalline, and Dongpeng Holdings will have more employees in 2022, reducing by 6506, 4429, 3413 and 2312, respectively, a year-on-year decrease of 28.45%, 15.86%, and 21.65%.

According to the 2022 financial report, there are also some companies with relatively large staff reductions, such as Gold Mantis, which fell from 14493 in 2021 to 12305 in 2022, a decrease of 2188 places, or 15.1%. The attrition of Diou Home is also more obvious, from 6,864 to 4,754, a decrease of 2,110.

The number of Easyhome decreased from 11,845 to 9,940, a decrease of 1,905. Companies such as Ashtronics, Sunshine Lighting, Dream Lily, Three Trees, Guangtian, Hollywood, Mona Lisa, Huida Sanitary Ware, Dongyi Risheng, Oriental Yuhong and other companies have decreased by thousands of people.

Jianlin Home, Xilinmen, Seagull Zhugong, Yaxia Shares, Wang Li Security, Meike Home, Beijian New Materials, Baoying Shares, Daya Shengxiang, Qumei Home, Jiayu Shares, Zhongtian Hardcover, My Le Home, Sanxiong Aurora, Piano, Dinggu Jichuang, Del Future, Mingdiao Shares, Vantage Shares, Haomei New Materials, Aopu Home, Aili Home, Zhibang Home, Oppein Home, etc., all have several hundred downsizing.

Longitudinally, the reduction of some enterprises did not start in 2022, as early as around 2020, there have been actions, and in successive years, the reduction of many enterprises has been thousands of people.

No category can avoid the occurrence of attrition, even in the track with good growth, there are also listed home furnishing companies that reduce staff. In some sectors where competition is intense, attrition is more common.

In the home furnishing store sector, in three years, the number of employees of Red Star Macalline and Easyhome has decreased by tens of thousands.

To a certain extent, the continuous and huge number of staff reductions reflects the grim situation faced by enterprises, and also reflects the impact on the confidence of market players in the future.

In the downsizing enterprises, most of them have experienced a decline in revenue and net profit. In this situation of poor performance, companies can reduce pressure and improve profits in the short term by reducing employees and salaries.

Dacai Research has noticed that the performance of some companies has not declined, or even increased, but they are still reducing employees, and there are various reasons behind them, such as the optimization of certain positions; Adjustments to certain lines of business, etc.

Another factor that leads to attrition is that some enterprises have completed a significant upgrade of the level of intelligent manufacturing, which will reduce the demand for production line personnel to a certain extent.

Of course, not all companies are reducing staff, some companies still achieved performance growth, the number of employees has also increased, according to Fangcai China's statistics, in 2022, 29 companies have increased staff, one of which has the same number of employees.

For example, Wanhua Chemical increased by 4,695 people. Foshan Lighting increased its workforce by 3604, a year-on-year increase of 38.81%. China Construction increased the number of employees by 2055, a year-on-year increase of 47.74%. Jianyi Group increased its workforce by 2012, a year-on-year increase of 569.97%. Henglin shares increased by 975 people.

Sophia increased its workforce by 420, a year-on-year increase of 2.9%. OPPLE Lighting increased its staff by 255, an increase of 4.24%. The number of boss appliances increased by 216, an increase of 4.43%.

Jiangshan Europe added 143 employees, an increase of 2.83%. Real Technology increased the number of employees by 98, an increase of 3.13%. Gold medal kitchen cabinets increased by 97, an increase of 1.53%. The number of Fa Lion Dragon increased by 74, an increase of 8.64%. Mengtian Home added 70 employees, an increase of 2.6%.

In addition, there are Weixing New Materials, Yitian Intelligence, Tianan New Materials, Shuaifeng Electric Appliances, Gujia Home, Rabbit Baby and other companies, all of which have dozens of employees growth, an increase of several percentage points.

In contrast, the proportion of companies with reduced staff is relatively large, exceeding the number of companies that have increased recruitment.

On a more holistic scale, it's not all bad news in the industry, with the number of R&D personnel rising amid an overall decline in the number of employees. According to the statistics of Leju Finance, among the 95 enterprises, more than 40 enterprises have increased their R&D personnel.

In parallel with the attrition, the phenomenon of salary reduction occurs, which may have a relatively limited impact on directors and supervisors, but ordinary employees are relatively affected, and when measuring the average salary, the decline is more obvious.

According to Leju Finance's "2022 Home Furnishing Executive Salary List", among the 95 listed home furnishing companies, 39 of the executives of the company raised salaries, accounting for more than 40%, with a total salary increase of 14.6122 million yuan. 36 people reduced their salaries, with a total salary reduction of 6.6102 million yuan. Another 18 maintained equal salaries.

It can be seen that the number of executives who raised their salaries exceeded those who reduced their salaries, which to a certain extent reflects that the impact on directors and supervisors is not obvious.

Dacai Research also found the above phenomenon when inquiring about the compensation of executives of various companies. The executives of many listed home furnishing companies, based on the vice president, can generally maintain an annual salary of 4.5 million yuan, and more people can also stabilize the annual salary of more than 800,000 yuan.

According to a set of data released by the Zhejiang Furniture Industry Association, according to the statistics of 1,213 enterprises above designated size in the province by the Zhejiang Provincial Department of Economy and Information Technology and the Provincial Bureau of Statistics, in 2022, the average number of all employees will be 190,900, down 7.4% year-on-year; Compensation payable to employees amounted to MOP15,941 million, down by 7.5% year-on-year.

Of course, the decrease in the salary payable to employees is related to the number of employees and the adjustment of the salary of specific positions. But going down is not a good thing.

The situation of Zhejiang's furniture industry can reflect the situation of other industries to a certain extent.

What about the building materials industry? Declines are common.

Compared with the data in the 2022 half-year report, the employee compensation payable by Beijian New Materials in the third quarter decreased by 97.10% month-on-month, Keshun shares decreased by 95.30% month-on-month, and Karen shares decreased by 76.99% month-on-month.

The same is true compared to the same period last year. As of the end of the third quarter of 2022, the remuneration payable by Keshun shares decreased by 25.15% year-on-year. Oriental Yuhong fell 9.55% year-on-year. Karen shares fell 38.51% year-on-year.

After entering 2023, there are also companies that disclose salary changes, and there are more salary reductions, and the remuneration payable by Karen shares in the first quarter decreased by 42% year-on-year; The compensation of senior executives of Beijian New Materials has generally declined; Keshun shares in the first quarter of the employee compensation payable decreased by 2.45%, and the executive compensation generally declined.

Combined with the aforementioned data on the 12.7% year-on-year decline in the salary payable to employees in the Zhejiang furniture industry, the overall situation is not optimistic.

Consistent with the foregoing, this decrease in compensation is related both to the reduction of employees and to the adjustment of compensation and benefits of specific personnel.

And what will the future hold?

Dacai Research believes that in 2023, the situation of layoffs and salary cuts may continue in some companies, and it is unlikely to improve significantly. However, some companies with better business performance and better cash flow will continue to recruit, increase personnel investment, and boost expansion strategies.

It is worth noting that in the short term, salary cuts and layoffs can reduce the pressure on enterprises to a certain extent by reducing operating costs, but this is only a short-term measure and cannot help enterprises really turn the situation around.

Dacai Research believes that in particular, the specific practice of salary cuts and layoffs must be accurately landed, eliminate losses and unnecessary positions, and at the same time motivate those backbone forces to be valuable. If valuable talent is laid off, the consequences will outweigh the losses.