The layoffs continue at Cossette Communication Group, this time at its Montreal office, where the head count has been reduced by approximately 40.
Some of that number are vacant positions the company has decided not to fill, but some are the result of pink slip distribution.
“I have never confirmed the number of people, but I believe it’s around 40,” said Dominique Lebel, executive vice-president of the Montreal and Quebec City offices. “In Montreal, we realigned our cost structure to anticipated business levels. That’s the reality. We changed roles for many people, moving some to other accounts. And we’ve fired a few people.”
In early March, the agency moved the majority of the work for Bell, it’s largest client, from Toronto to Montreal. This led to 50 to 55 layoffs in Toronto, with an additional 50 vacant positions left unfilled—so called “attrition” losses.
Subsequent news that Bell had made its relationship with Cossette non-exclusive, allowing it to work with other ad agencies, prompted BMO Capital Markets to reduce the agency’s stock performance rating.
BMO Capital Markets said the new non-exclusive relationship between Cossette and Bell will likely lead to reviews on part or all of the account. “While it is impossible to predict the financial effect on Cossette, we believe one conclusion is relatively certain. The Bell account has been put in play and Cossette will have to defend its position,” stated the note written by BMO media analyst Jeff Tkachuk.
BMO predicted Cossette will lose 25% of Bell’s business, representing $15 million in income for the agency this year.
However, even in early May, Cossette said it would be adding, not cutting, staff from its Montreal office. During a conference call on May 1, chief financial officer Jean Royer said the Toronto cuts would be partly offset by the hiring of approximately 10 new staffers in Montreal.
Based on the increased number of layoffs in Montreal, Tkachuk stands by the $15 million estimate. Royer told Tkachuk the estimate was “fair,” confirming the Montreal layoffs are tied directly to changes in the Bell account.
The spending cut could be even more than $15 million, said Tkachuk, “because they haven’t filled those 50 positions, and they’re able to move people onto other accounts.”
Tkachuk added, however, that it’s not all doom and gloom for the Quebec City-based agency network.
“Maybe the Bell spending is down, but spending from their existing client base is growing and offsetting some of the declines,” he said, citing a 4% to 5% projected growth in annual revenues and the continuing financial success of Cossette’s European businesses, which include Identica Branding and Design and Dare Digital in the U.K., among others.
