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The pain in Spain

Many large Spanish firms seem to want to defy gravity. They are desperate for work and to keep utilisation rates up, and most significantly, avoid public lay-offs - they're all cost-cutting like mad, and "managing attrition" but no-on wants to be appear in the newspapers for having implemented an ERE (official redundancy programme). Without being paid for the work they are actually doing however, they seem to be ignoring the realities of the economic situation outside their own plush four walls, but which is getting ever nearer to home. Their clients must think their mad or already over-paid, or "why wont they do my work for free?". The UK & US firms are cutting back, they must be doing it for a reason?! Most big Spanish firms' partners are praying for an upturn that never comes and still seemingly willing to swallow the cost of (admittedly very cheap by UK standards) associates working on jobs for nothing. The management are scared to take the big decisions, instead preferring to dilute the equity - less fixed-costs on the P&L + more "profitability" - and claim growth when there is none. Cuatrecasas recently announced a 0.4% revenue increase (2010 v 2011), but with Spanish inflation currently running at c 2%, that's actually a 1.6% decrease year on year. Garrigues posted revenue growth of 0.68%, but its year-end is in August, so last year's figures don't even reflect the very dramatic drop in Spanish activity that has occurred since last summer. Only one of the big firms has been honest about what is actually happening, as far as I can see. Pehaps however, reality is beginning to dawn. Cuatrecasas has told 35 of its salaried partners to shape-up or ship out, if they ever want to see equity. That two of the firm's key finance partners are meanwhile pimping out their teams for nothing, with the management's consent, must however be a kick in the teeth for those of the 35 who've been told that their billings aren't up to the level required to be a "proper" partner.

18-Jun-2012

9:50 am