On May 14 the Ship Power business of Wärtsilä Corporation initiated formal process to realign its organization and resources to adjust to the substantially weakened global marine market situation. Negotiations will affect all of Wärtsilä Ship Power’s personnel in all functions globally. The number of jobs to be reduced is 400-450, of which approximately 80 are in Finland.
In taking these measures, Wärtsilä is looking for annual savings of approximately $40.6m. The effect of the savings will start to materialize gradually from the second part of 2009, and will take full effect by the end of 2010.
“The situation in the shipping industry has changed dramatically during the past six months, and we have taken all possible measures to avoid job cuts,” said Jaakko Eskola, Group Vice President, Ship Power.
“As the market outlook continues to be very challenging, we must find cost-saving measures that ensure the Ship Power organization’s ability to maintain its competitiveness and efficiency, while at the same time, not jeopardizing customer commitments, ” Eskola continued.
Due to the global economic crisis, the shipping industry and shipbuilding markets have collapsed after a long period of high demand. In the period January-April 2009, the order intake of Ship Power plunged to $182.7m, a drop of 86% compared to the corresponding period a year earlier. There is overcapacity in all major vessel segments. In addition to lowered demand, there are risks related to delivery of existing orders as well as order postponements.
Wärtsilä sees a potential risk of Ship Power order cancellations amounting to approximately $1,353.3m. During the period January-April 2009, cancellations of $101.5m materialized and were deducted from the order book.
Through the personnel negotiations, Wärtsilä aims to adjust its Ship Power business to respond to the needs of its customer segments. The effect of these adjustments on different personnel groups will be specified as the negotiations proceed.