To maintain its future viability, MAN Energy Solutions has decided on a restructuring plan involving staff reductions and the closing of its steam turbine division. The executive board and employee representatives have agreed the joint plan, expressed in a paper that outlines the key points of the restructuring. The paper proposes a reduction of 2600 jobs overall. In return concessions related to labour costs are agreed upon that will allow the company to achieve its restructuring objectives.
The company will reduce the size of its Berlin site and operations there will be focused on the production of components. It will also keep its service business in Hamburg intact. It will, however, halt steam turbine production, which is also conducted there. Restructuring measures have been agreed upon for the Augsburg and Oberhausen sites, and the organisations in Denmark, France, England, and Switzerland will also be streamlined.
The implementation of these measures will result in the loss of approximately 1650 jobs in Germany and 950 in other countries.
In order to meet the targeted cost cuts of 450 million euros the parties of the collective labour agreement will negotiate in order to achieve a reduction in personnel costs of around 40 million euros annually for the period from 2021 to 2023.
According to Dr Uwe Lauber, CEO of MAN Energy Solutions: “As much as we would like to, we cannot avoid job cuts completely. The implementation of the measures agreed upon in the paper on the basis of compensating measures will result in fewer job cuts than originally planned. At the same time, we are sticking to our target and creating the necessary freedom to more effectively absorb external effects in the future. We are streamlining and focusing our organisational structures and are improving our earnings situation over the long term by cutting costs.”
The Volkswagen Group, which owns MAN, supports the agreements outlined in the paper, expecting that the necessary prerequisites for implementation will be successfully finalised by the end of 2020. Once this has happened Volkswagen will suspend its plans to sell MAN Energy Solutions until the finalisation of the restructuring efforts, which include the relocation of products to foreign production centres. This will apply at least until the end of 2024. The Volkswagen Group has further agreed that the company will remain part of the group until at least the end of 2026 if it achieves a profitability target of 9% EBIT on a consistent basis by that date.
“Volkswagen has called on both the management and employees of MAN Energy Solutions to come up with a concept that will make it possible for the company to position itself for the future and achieve financial independence,” said Dr Lauber. “The paper lays the foundation for this concept. Volkswagen is now giving us the opportunity to implement the agreed upon measures as part of the group.”