Wärtsilä Reduces Manufacturing Footprint

Wednesday, January 20, 2010

Wärtsilä has analysed its manufacturing footprint as announced in October. To adjust to the fundamental changes in the market Wärtsilä plans to reduce its manufacturing capacity. Wärtsilä also 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 this market.
 
In the course of 2010 Wärtsilä plans to reduce approximately 1,400 jobs globally within the Group. Of these reductions 570 are planned to be 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 1,561 people in the Netherlands.
 
"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 during 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. It is our responsibility to ensure Wärtsilä's leading position now and in the future," says Ole Johansson, President & CEO.
 
The non-recurring costs related to the restructuring will be approximately $198.8m. This includes non-cash write offs of approximately $71m of which $56.8m is recognized in 2009. Wärtsilä is looking for cost savings of approximately $113.6-127.8m. The effect of the savings will start to materialize gradually during 2010, and will take full effect in the first half of 2011.
 
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.
 
Already in 2009 Wärtsilä utilized 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 totaled 18,541 at the end of 2009.
 
Wärtsilä will continue the manufacturing of large four-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.
 
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.
 
Wärtsilä will publish its Financial Statements Bulletin on January 28, 2010 at 8.30 am EET.

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