Industrial group Georg Fischer AG is reducing its operational structure and cutting corporate operating costs by 350 million Swiss francs (est. $330 million,) explaining that it has been “heavily affected by the present economic crisis.”
"We have reacted swiftly and purposefully to the economic crisis and have already reduced costs substantially,” stated GF CEO Yves Serra. “Our task in these difficult times is to take far-reaching measures. These decisions were certainly not easy to take. The structural program creates the conditions for GF to emerge strengthened from this crisis and to benefit from its good market position."
In its forecast, the group said there will be no sustainable recovery before 2011.
GF Automotive — which produces ferrous and nonferrous castings and diecastings — is restructuring its capacity according to it demand forecasts, and will sell its Gleisdorf, Austria, light-metal diecasting plant to Bavaria Industriekapital AG for an undisclosed price. GF also intends to sell its Garching, Germany, diecasting plant. Three plants at Herzogenburg, Austria, will be consolidated, and the shift of production from a Montreal, Quebec, magnesium diecasting plant to China will be completed by midyear.
GF AgieCharmilles — which manufactures EDM systems and other machine tools — is eliminating “double tracking” production, and as part of a previously announced plan to focus work at three locations (Geneva, Losone, and Nidau), the Mikron Schaffhausen assembly plant will be transferred to Nidau (Biel), Switzerland. The Schaffhausen plant will be closed.
Also, GF AgieCharmilles’ global sales organization underwent has been “streamlined” in recent months.
GF Piping Systems — which produces a range of plastic pipe, joints, valves, and fittings for industrial conveying and treating of liquids and gases — is consolidating production at one plant in Italy, and adjusting capacity at a Schaffhausen, Switzerland, plant.
With the new initiative GF states its objective is to post positive operating costs and positive free-cash flow in 2010, and to achieve an EBIT margin of 8% no later than 2012. The organizational changes will be mostly complete by the end of this year, and will result in a one-time charge of 100 million Swiss francs (est. $94 million.)
In late November 2008 the group began scaling back its operating capacity, anticipating weaker industrial demand. GF said it recorded a 38% drop in first-quarter 2009 sales versus Q1 2008, with an EBIT loss of 46 million Swiss francs (est. $43.3 million.) The first-quarter sales results were particularly bad for the GF Automotive (-47%) and GF Agie Charmilles (-38%) units.
GF Piping Systems recorded a -18% decline in 2009 first-quarter sales.
Among the structural changes, Georg Fischer is reducing operating and personnel expenses by more than 20%, and operating capacity and external expenses have been adjusted to current sales levels. About 5,500 workers in Europe (Austria, France, Germany, Switzerland) have been placed on “short-time work,” and other workers have had their working hours and wages adjusted. Corporate executive committee members and 250 senior managers have had salaries reduced 10%; the CEO and directors will waive 20% of their compensation.
By mid-2010 GF will have reduced employment by 2,300 positions or 16% overall versus 2008. One quarter of the positions to be eliminated are in Switzerland.