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FT.com / Companies / Consumer industries - TNT in threat to quit Germany

TNT in threat to quit Germany
By Michael Steen in Amsterdam

Published: February 18 2008 19:32 | Last updated: February 18 2008 19:32

TNT said it could be forced to consider closing its German mail operations if it loses a court challenge to gain exemption from the German minimum wage for postal workers. But the Dutch post and courier group said it remained hopeful of success next month.

Germany introduced the €9.80 minimum wage for postal workers in December, before opening up the postal market to competition. But TNT and other groups planning to compete against Deutsche Post complained the rate was set deliberately high to prevent any serious challenge to the former monopoly.

“If we’re forced to pay €9.80, that puts great pressure on the business case and we’ll have to decide what the most sensible route is,” Peter Bakker, TNT chief executive, said as the group published fourth-quarter results.

He said he could not rule out withdrawing from Germany if the wage was imposed. Another Deutsche Post competitor, Pin Group, has already started laying off its staff.

TNT employs 14,000 workers in its loss-making German operation, which generated €233m ($341m) in revenues last year.

The company says it can stomach start-up losses if it pays employees €7.50 an hour, as it has agreed with its own German union.

TNT plans to argue in a Berlin court in March that the minimum wage law stifles competition. Mr Bakker said the investigation into alleged tax evasion by Deutsche Post’s former chief executive, Klaus Zumwinkel – seen as an architect of the minimum wage plan – did not materially affect the case.

“If it was just a deal between Zumwinkel and the unions, you could probably have some hope,” he said. “But it’s not. Zumwinkel made the deal and then the cabinet said yes, and parliament said yes and now it’s law...So far, everything has gone against us in Germany.”

The Dutch government retaliated against the German minimum wage legislation by putting on hold the full liberalisation of the Dutch postal market, where TNT’s monopoly on mail under 50g had been due to end in January.

TNT said its fourth-quarter net profit dropped to €148m from €189m a year ago after a €110m charge for restructuring its shrinking domestic postal business. Its shares closed up 0.8 per cent at €27.48.
Copyright The Financial Times Limited 2008