Why is Dyson laying off 1,000 employees?

It is frequently hailed as the hero of British manufacturing. But famed vacuum cleaner brand, Dyson, has today told workers it will make 1,000 layoffs as part of a global cost-cutting plan.

Dyson Limited currently employs around 3,500 UK employees across three offices in London, Wiltshire, and Bristol. Dyson workers were reportedly informed about the cuts on Tuesday morning. The news of the layoffs was first broken by the Financial Times.

Founded by Sir James Dyson, a billionaire who has frequently appeared on the Sunday Times Rich List, Dyson made a name for itself as a producer of pioneering technology inventions. These included vacuum cleaners, hair and hand dryers, and bladeless fans.

The firm was previously forced to cut 600 jobs in the UK in 2020 as a result of COVID-19. Below, we examine what’s behind these latest layoffs, and what the future holds for Dyson.

Need to compete

Since he founded the company in 1991, Sir James Dyson has been the face of the Dyson brand. His inventions, such as the first cordless vacuum cleaner, made him a Doc Brown-like figure who was seen as being at the cutting edge of consumer technology.

That transformational leadership style has continued to guide the company. Last year, Dyson announced plans to invest £100m in a new research and development (R&D) hub in Bristol. When opened, it will be home to hundreds of software and AI engineers.

These plans to expand and ‘get ahead’ of rivals might have spurred the decision to make job cuts. When Dyson CEO, Hanno Kirner confirmed the layoffs, he described the global markets in which Dyson operates as “increasingly fierce and competitive”.

In a statement, Dyson chief executive Hanno Kirner told the Financial Times that “we know we always need to be entrepreneurial and agile. We have grown quickly and, like all companies, we review our global structures from time to time to ensure we are prepared for the future.”

That argument echoes a viewpoint taken by another international tech company, Meta. Last January, the company behind Facebook laid off 13% of its employees in a bid to ‘trim the fat’ and streamline the workforce to be more cost-effective.

By reducing staffing costs, Dyson is adopting a leaner business model in order to pour more investment into its R&D departments and manufacturing plants.

Customer behaviour changing

Over the years, Dyson has experimented with more product types, such as its active noise-cancelling and air-purifying headphones, in a bid to attract new customers. The majority of these have remained at a very high price point.

Compared to competitors such as Bose, Dyson’s Zone Wireless Headphones are currently retailing for £550. This is around 42% more than Bose’s counterpart (RRP: £380).

With Brits battling through a cost of living crisis, this premium cost might have impacted Dyson’s sales figures, potentially contributing to the latest round of layoffs. In Dyson’s last submitted accounts, filed in October 2023, the firm reported an £800,000 fall in pre-tax annual profits between 2022 and 2023, as the number of goods sold dropped.

It would not be the first time that Dyson has made job cuts because of changing consumer behaviours. Back in 2020, it laid off 600 employees after the COVID-19 pandemic hit one of its core sales channels, in-store retail.

At the time, Dyson sold many of its products in department stores such as John Lewis. However, as COVID-19 decimated the high street and sent many brands into administration, Dyson pivoted and began to cut many retail and customer service-based roles.

It remains unclear which roles will be axed following Dyson’s most recent workforce review. Likely, it could be another retail cull.

In 2023, Dyson reported that a higher proportion of sales were made via its website, suggesting the brand will lean more into ecommerce sales over retail partnerships this year.

Culture of “fear”

Dyson has also been plagued by internal challenges. Like many employers, the firm has been engaged in debates with employees about a return to the office (RTO) post-COVID.

Last September, the Financial Times interviewed 27 ex-Dyson employees who reported on a divide between the leadership team and wider staff. They told the news outlet that staff had been subject to “rigorous” monitoring while working from home.

Four people who were interviewed by the FT also separately characterised the organisational culture at the company as one of “fear”.

Other major employers including Dell have taken similar measures to force team members back to the workplace. But Dell managers are also reportedly letting their reports work from home anyway, a form of dissension known as ‘hushed hybrid’.

While it is impossible to say for certain, Dyson’s decision to cut roles could be influenced by its failed RTO drive. Research by BambooHR finds one quarter of executives, and a fifth of HR professionals, said they introduced RTO mandates in the hope it would drive staff out.

Manchester United is one employer who has been less subtle about this approach. In May, it told workers who did not wish to return to the office full-time to quit and receive a payout.

What’s next for Dyson?

It is not unusual for companies to cut down on staff as they look to streamline and cut costs. In fact, mass layoffs have become increasingly common over the last few years; a symptom of today’s poor economic conditions.

Just yesterday, Microsoft confirmed it will make a fresh round of layoffs in July. It has already made around 3,000 staff members redundant this year.

Nonetheless, Dyson is one of the biggest success stories of UK manufacturing. Analysts will be keeping a close eye on what this latest round of cuts will mean for its next growth phase.