Tempur-Pedic is shutting down its London warehouse, cutting 20 jobs as it moves its shipping and storage business to Toronto.
The bedding business will have only a regional sales and administration office remaining here after the warehouses operation is outsourced and moved Sept. 1, cutting about 40 per cent of its workforce.
"They say they want to improve service levels but it is not about that at all, it is about cutting costs and saving money," said one company official, who declined to be identified.
Lexington Ky.-based Tempur-Pedic International bought Tempur Canada in April 2010.
"It is a typical situation where an American company comes in and uses their business model," the official added.
The company has stated the move will better service, but Tempur-Pedic has scored high in customer service surveys prior to this move, the official added.
"It is not about that, we were No. 1, but now we will not be responsible for shipping."
Steve Miller, manager of the London office, did not return calls.
However, in a recent release Rick Anderson, president of Tempur-Pedic North America, said the changes are the result of "an exhaustive study" of the company's distribution strategy.
"As a result of the study, we have determined that opening distribution facilities closer to our customers will improve service levels both now and in the future," he said in a statement.
"This will place our products closer to retail demand, hence improving customer service."
In the statement Tempur-Pedic said employees whose positions were eliminated were provided with exit packages in excess of the requirements of the Employment Standards Act.
The Canadian operation had sales of approximately $9 million in 2009 but is now part of the parent company's North America operating division.
The website it also reported recently Tempur-Pedic, reported 2008 sales fell 16.2 per cent to US$927.8 million from 2007's US$1.1 billion.
Net profits plummeted 97.4 per cent to US$1.1 million.
It also reported mattress unit sales declined 31% globally in the fourth quarter, with U.S. sales falling 39% and international sales declining 21%. Pillow unit sales in the year's final quarter fell 37%.