Sandvik AB has announced further restructuring of the group in several of its key business areas. The company also announced a number of measures to adjust costs due to the weaker market demand experienced during the third quarter and that has persisted thus far into the fourth quarter 2012.
In addition to the ongoing improvement efforts at Sandvik Mining, a reduction of 650 employees globally has been deemed necessary, including the closure of the units in North Bay, Canada, and Rocklea, Australia. Third-party contracts with more than 350 individuals will be terminated.
At Sandvik Machining Solutions, opportunities to generate economies of scale have been identified, states the company. The distribution centre in Kentucky, USA, will incorporate Seco Tools products. Consequently, the Seco Tools US distribution centre in Troy will be closed. Combined with other initiatives across the business area, including a headcount reduction in Fagersta, Sweden, this is expected to result in a structural reduction in costs of 150 million SEK.
As part of the ongoing review of the wire business, Sandvik Materials Technology will restructure the wire operations at Sandvik Española in Barcelona, Spain. Parts of the product program will be transferred to other units. The work to simplify the organization will continue to support the ongoing strategic shift of the product mix toward more advanced products. In total, the changes will lead to a further structural redundancy of approximately 220 positions globally.
Sandvik Construction has implemented further actions aimed at optimizing the overall cost structure at the business area and addressing the continued subdued market activity. The number of employees is being reduced by 80, in addition to a further 180 employed by third parties.
On the announced adjustments, targeted cost savings will amount to more than 1 billion SEK by the end of 2013. Charges of a nonrecurring nature amounting to approximately 1,300 million SEK are estimated to impact earnings, of which 900 million SEK will be recognized in the fourth quarter 2012.
“A year has soon passed since we began the implementation of the new strategy. A great deal of hard work has been done and much has been achieved. In our drive to continuously improve our company, we have identified several additional opportunities. Consequently, decisions have been taken on a number of actions to adjust costs and capacity. None of these measures affect our ability to grow our business in the long term,” stated Olof Faxander, President and CEO of Sandvik.
Posted by: Paul Whittaker, Editor ipmd.net, [email protected]