To adjust to the fundamental changes in the market, Wärtsilä plans to reduce its manufacturing capacity and plans to relocate a large part of its production to China. These measures will result in the loss of 1400 jobs.
The company plans to move the majority of its propeller production and auxiliary engine production to China, close to the main marine markets. The current propeller manufacturing in Drunen, and the component manufacturing DTS in Zwolle, both in the Netherlands, are planned to be closed. The Wärtsilä 20 generating set production in Vaasa Finland is planned to be closed and moved to China in order to stay competitive in the market.
570 Jobs Lost in the Netherlands
Of the 1400 lay-offs, 570 are planned in the Netherlands. The remaining reduction will impact various divisions, functions and countries and will be clarified during the first half of this year. Currently, Wärtsilä employs 1561 people in the Netherlands.
In 2009 Wärtsilä utilised its flexible operating model to adjust the capacity to the new market demand and initiated and largely implemented actions to reduce approximately 600 jobs. Wärtsilä’s personnel totalled 18,541 at the end of 2009.
‘The world has dramatically changed in a short period of time. China has become a strong maritime centre and its growth will continue. The low activity in the global marine market continued throughout 2009. Wärtsilä Ship Power order intake was significantly lower than previous years. Competition in the market will intensify. By developing our manufacturing footprint and our businesses for the future key markets, Wärtsilä will further improve its competitiveness and service to our customers in the tightening markets,” says Ole Johansson, President & CEO.
Cost Savings
The non-recurring costs related to the restructuring will be approximately EUR 140 million. This includes non-cash write offs of approximately EUR 50 million of which EUR 40 million is recognized in 2009. Wärtsilä is looking for cost savings of approximately EUR 80-90 million. The effect of the savings will start to materialise gradually during 2010, and will take full effect in the first half of 2011.
Consultation Processes
The formal consultation processes will be initiated in the affected countries according to local practices and legislation. The company will provide support and consultation as well as assistance in re-employment in the impacted countries.
Remaining Activities in Europe
Wärtsilä will continue the manufacturing of large 4-stroke engines in Europe; in Vaasa, Finland and Trieste, Italy. The R&D activities in Europe will be maintained in the current locations. In the Netherlands Wärtsilä will establish a Propulsion Technology & Services Centre.
Preliminary Financial Information 2009 and Prospects 2010
Wärtsilä’s net sales grew 14% and profitability before non-recurring items improved compared to 2008. In 2010 Wärtsilä’s net sales will be impacted by the marine market situation and lower order book. Net sales for 2010 will be 10-20% below 2009. Profitability before non-recurring items is expected to be approximately 9-10%, which is at the upper range of Wärtsilä’s long term profitability target.
