Georg Fischer cuts 2,300 jobs
Industrial concern Georg Fischer has announced it must cut 2,300 jobs over the next few months after a new round of debilitating losses in the first quarter of 2009.
“In the wave of an unprecedented market slump,” the Schaffhausen-based company said on Thursday the cuts would amount to 16 per cent of its workforce. A quarter of the job losses will come from positions in Switzerland.
The company said it “regrets” the cuts and the effects it will have on the people concerned. In a statement Georg Fischer said that it would do its “utmost” to make the cuts “as socially compatible as possible”.
“The reason behind this is that Georg Fischer has been heavily hit by the current economic crisis,” Bettina Schmidt, company communications director told Swiss German-language radio on Thursday morning. “We’ve been feeling it since last autumn.”
The move comes after Georg Fischer reported a SFr46 million ($42.1 million) loss in operating revenue for the first quarter of 2009. Sales had slid 38 per cent against figures for the same period last year.
The statement said the company does not anticipate an upswing before 2011.
Cost cutting
The job cuts are intended to save SFr350 million in total costs at a time when the industrial consortium is haemorrhaging cash on weak sales, particularly in a troubled auto industry.
In February Georg Fischer, with corporate groups that deal in industrial parts, automobile machinery and conduit sales, reported that full-year net profit had plummeted in 2008 from SFr245 million to SFr69 million.
The steep decline continued into the first quarter of 2009, when the company’s automotive branch bottomed out with a 47 per cent loss in sales compared to the same period last year.
Other sectors have also been adversely affected. The consortium’s pipes business, which makes plastic and metal conduits, lost 18 per cent in the first quarter. Georg Fischer’s AgieCharmilles division, a milling and moulding branch, suffered an “unprecedented decline” with a 38 per cent drop in business, the company statement reports.
All three corporate groups are undergoing restructuring. Executives plan to consolidate production sites in Austria, Italy and Switzerland. They have also announced the sale of a foundry in Gleisdorf, Austria.
“We have reacted swiftly and purposefully to the economic crisis and have already reduced costs substantially,” said Yves Serra, chief executive officer. “Our task in these difficult times is to take far-reaching measures. These decisions were certainly not easy to take.”
On the block
About 990 jobs, or seven per cent of the 2008 workforce, have already been slashed from the company payroll during the first few months of 2009.
Of the remaining 1,300 jobs to go, the company said one third would be eliminated through early retirement schemes and by not replacing employees who leave of their own accord.
“Nevertheless it will not be possible to avoid dismissing some 850 employees,” the company said. In total about 575 jobs in Switzerland will no longer exist.
The company has already reduced its operating and personnel costs by about 20 per cent. This month about 5,500 employees in Germany, Austria, France and Switzerland began working reduced hours.
The fixed salaries of executives and 250 senior managers were also reduced by ten per cent starting this month. The CEO and board members will waive 20 per cent of their fixed salary or cash compensation, the company said.
The cuts are intended to increase the company’s earnings margins while lowering its net debt. With the restructuring measures, executives hope to generate an additional SFr100 million in cash flow annually.
By early 2010, when the job cuts are complete, company analysts believe Georg Fischer could be back in the black even in a sluggish economy.
swissinfo.ch with agencies
Georg Fischer was founded in 1802 with headquarters in Schaffhausen in northern Switzerland and now includes three core businesses, GF Piping Systems, GF Automotive and GF AgieCharmilles, a milling and mould division.
In healthier economic times the corporation enjoyed SFr4.5 billion in sales and had upwards of 14,000 people employed worldwide. It has 81 companies in Europe, 38 in Asia and the Middle East, 15 in the United States and three in Australia.
At the end of 2008, Swiss nationals held the majority of its registered shares at 80%.
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