Commercial Property

WeWork plans 4,000 job cuts in turnaround plan

Japan’s Softbank took control of co-working business this week

WeWork co-founder Adam Neumann will exit the board. Photograph: Timothy A Clary/AFP via Getty Images

Wed Oct 23 2019 - 19:01

WeWork is planning to cut as many as 4,000 jobs as part of an aggressive turnround plan put in place by Japan's SoftBank after it took control of the co-working business this week.

According to people with direct knowledge of its plans, the job cuts will amount to just under 30 per cent of WeWork’s global workforce of around 14,000 people. About 1,000 of the cuts will hit employees such as janitorial staff, which WeWork is looking to move to an outsourcing company.

WeWork is also looking to prioritise three markets – the US, Europe and Japan – and will pull back from other regions including China, India and much of Latin America. It has already begun looking at building closures in parts of its portfolio including in China and other regions.

The company has pulled out of a number of office space deals in Dublin in recent months.

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The SoftBank-controlled company has set a goal of boosting occupancy rates in its most important markets to about 90 per cent, the people said. That compares to an occupancy that had dipped below 80 per cent as it pursued a business model more focused around global growth and expansion.

Addressed staff

Marcelo Claure, the SoftBank executive who has been named executive chairman of the office space provider, addressed WeWork staff on Wednesday, telling them that the company would have to "right-size" its business to reach profitability and that would include job cuts.

“Yes, there will be lay-offs – I don’t know how many – and yes, we have to right-size the business to achieve positive free cash flow and profitability,” he wrote in a memo reviewed by the Financial Times.

Mr Claure added: “But I will promise you that those that leave us will be treated with respect, dignity and fairness. And for those that stay, we will ensure everyone is aligned and shares in future value creation.”

WeWork declined to comment. – Copyright The Financial Times Limited 2019

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