Hydro has announced to initiate a comprehensive restructuring programme in its Rolled Products business, accompanied by the reduction of 735 jobs. Hydro’s rolling business has shown “disappointing financial performance” over the last years. “We are taking forceful actions to improve our profitability,” says Einar Glomnes, executive vice-president, Rolled Products.
The restructuring includes the planned closure of parts of the foil production at the Grevenbroich plant in Germany as well as efficiency measures across the organization. “Our cost position in parts of our foil business is too high, mainly due to manning-intensive and manual production processes, and we are also facing strong competition in this market segment. As a consequence, we are planning to close our foil mainline,” says Glomnes.
Already in September 2018 Hydro announced the exit of the foil conversion business by the end of 2019. These closures combined represents around 30% of the overall foil production of Rolled Products.
The total restructuring consists of a planned reduction of personnel cost of up to 60 million euros per year. This will lead to a redundancy of up to 735 full time jobs. This number includes the reduction of 226 employees through the planned closure of the foil mainline by the end of 2020 and 117 jobs through the exit of the conversion business by the end of 2019. Both production areas relate to the Grevenbroich site. Efficiency measures throughout all Rolled Products sites will close the gap up to 735 jobs and is planned to be delivered by 2024, with the majority by the end of 2022.
The total restructuring cost is around 160 million euros, of which 100 to 120 million euros will be taken as a provision in the third quarter of 2019. Parts of the manning reduction are dependent on limited capital expenditure.
Rolled Products, says Hydro, will further strengthen its focus on growth markets like the automotive and can business, where the company has made significant investments in the new Automotive Line 3 at Grevenbroich and in a recycling facility for used beverage cans in Neuss. “Our products are well perceived by our customers. This feedback is rooted in our high-quality products and product consistency as well as our secure supply and timely deliveries. It is now on us to turn our strength into better results,” says Glomnes.