Belgium: Cost-Cutting Measures Solvay to Close Tow Sites Due to Weakening Demand
Due to lower customer demand from Covid-19, the Solvay`s Composite Materials business will accelerate existing efficiency plans. This is to be accomplished by restructuring its manufacturing footprint with the intent to close two sites and reduce global headcount by 20 %.
Brussels — The Belgian speciality chemicals company Solvay announced it will deepen and accelerate plans for its Composite Materials unit to reduce costs, improve productivity and better serve customers in light of reduced activity due to the Covid-19 crisis.
Building on measures already implemented earlier this year, the company's Composite Materials business intends to cease industrial operations at its plants in Manchester, UK, and Tulsa, Oklahoma (USA). Those activities will thereby be transferred to other facilities. This is to increase capacity and improve operational efficiency. In addition, job reductions are being implemented across the business, and total headcount will likely reduce by approximately 570 positions, or around 20 % of its workforce.
These structural changes are to enable the business to adapt its cost structures and to partially mitigate the downturn in the near term. The implementation of this plan is expected to be largely complete by the end of 2020 and are to result in annualized cost savings of approximately $ 65 million. A restructuring charge of around $ 28 million will be taken in Q2.
Furthermore, a cost-reduction program was implemented in response to the reduced production of Boeing 737 MAX. These steps led to record results in 2019 and sustained performance in the first quarter 2020, but are not sufficient to overcome the significant headwinds related to Covid-19. The current crisis has triggered an industry-wide reduction in expected demand in civil aircraft build rates for the near term.
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