MAN Energy Solutions says an extensive cost-cutting and restructuring programme is needed to ensure the future viability of the company. Measures include the elimination of up to 3000 positions in Germany and 950 in other countries.
‘We need to prepare ourselves for a market environment that will remain difficult for a long period of time,’ says Dr. Uwe Lauber, CEO of MAN Energy Solutions. ‘Some of the company’s key areas of business, such as the cruise ship business, have been directly affected by the economic impact of the Covid-19 pandemic and we do not expect to see a recovery to precrisis levels until 2023. The programme is designed to address these negative market influences and make lasting improvements to MAN Energy Solutions’ ability to respond to market fluctuations.’
It total, the company seeks to reduce costs by 450 million euros and increase its operational flexibility. The aim is to achieve an operating margin of nine per cent and improve the company’s cash and liquidity position by 2023, taking the global economic impact of Covid-19 into account.
Adapting and optimising the production network with a focus on core value creation and greater flexibility is a key component of the programme. In this context, the company intends to halt steam turbine production in Hamburg and is also considering closing the production facility in Berlin and relocating production currently conducted there to another site.
The program will also focus on reducing the cost of materials and equipment, optimising the service network, streamlining the product range, cutting costs within the group functions, and focusing research and development on next-generation technologies.
Compulsory redundancies not ruled out
The executive board expects that the implementation of the programme will result in the elimination of up to 3000 positions in Germany and 950 abroad. The company says it will try to carry out this reduction in a socially responsible manner as far as possible, although compulsory redundancies cannot be completely ruled out.
The executive board has initiated talks with the works council regarding the programme and the associated effects on employees. ‘In the light of the effects the Covid-19 pandemic has on our target markets, we must act fast,’ says Martin Rosik, Board Member responsible for Human Resources at MAN Energy Solutions. ‘The company and the employee representatives are therefore negotiating under great pressure. Our focus is on structural improvement and on reaching the cost down target. We will negotiate the feasible options to get there with the employee representatives in a very timely manner.’
MAN Energy Solutions was already changing its business after it announced a new strategy in 2018. This strategy describes the company’s transformation from a component supplier to provider of sustainable energy solutions. These new solutions are expected to account for fifty per cent of its business by 2030.
Picture: MAN B&W 11G90ME-GI dual-fuel engine (by MAN).