LONDON — Global distribution group Electrocomponents plc, which trades in the U.K and most of Europe as RS Components, is laying off 340 permanent staff, releasing 90 temporary agency staff but is also creating 150 positions as it reorganizes the way it does business.

RS Components (Corby, England) has started consultations with the 150 UK staff impacted by the redundancies, which are part of a worldwide cost-reduction plan trailed in December to reduce global operating costs by £15million in response to the severe economic downturn.

At the time, RS warned of weakening demand in the UK market with sales falling by 6 percent in the previous three months.

The catalogue distribution group has already taken other actions to reduce costs across the business, including cutting out management bonuses and a freeze on salaries.

There will be consolidation between the two warehouses in Corby and Nuneaton which, RS says, will lead to increased specialization of activity in each location and a growth in the number of jobs at Nuneaton.

Many of the job cuts will come through a reduction of the sales force and trade counter staff, a consequence of a significant slowdown in sales volumes; changing trade counter shift patterns; and an increased use of marketing/eCommerce communications.

Earlier this month, RS said just over half its UK distribution business is now done over the Internet. Previously, the company set a target date of April 2009 to achieve the 50 percent online business.

There are also plans to increase in efficiency of the back office processes through exploiting the benefits of a common systems infrastructure.

Commenting on the proposals, Electrocomponents' Chief Executive, Ian Mason, said : " These hard decisions are taken in light of the severe economic downturn and its effect on our business. Difficult though they are, I believe that the actions we are taking will make our business stronger in the future."