Feb 14 2014
In June 2013, Outokumpu announced a strategic review of its thin and precision strip operations in Kloster and Nyby, Sweden and in Dahlerbrück, Germany with the aim of reducing capacities and achieving cost savings through increased efficiencies.
As a result of the review, the company plans to discontinue its operations in Kloster, Sweden. Outokumpu will continue the operations in Nyby, Sweden and in Dahlerbrück, Germany as before.
During the review, Outokumpu conducted extensive production tests to evaluate whether it would be technically and financially feasible to move the production of the Nyby product portfolio to the company’s other mills in Europe. Conclusion from the testing was that production shifts would not be feasible given the special production requirements of the Nyby product portfolio. Therefore, Outokumpu operations in Nyby will continue as before.
Outokumpu also evaluated options for achieving increased efficiency in its thin and precision strip operations in Kloster, Sweden and Dahlerbrück, Germany. Kloster unit has been implementing a restructuring program since June 2011 to turn the unit back to profitability. Despite increased efficiencies the unit continues to be loss making and therefore Outokumpu plans to close down the Kloster unit by the end of 2014. Outokumpu will honor its commitments to the Kloster customers during the transition period whilst planning to move Kloster production to its other sites in Europe. Kloster has approximately 170 employees and it had a production volume of approximately 18,000 tonnes of stainless steel in 2013.
With close to 2,000 employees, Sweden continues to be one of the key countries for Outokumpu. The units in Avesta, Nyby and Degerfors form the core of Outokumpu’s specialty stainless steel business. In 2013, Outokumpu finalized a EUR 100 million investment program in Degerfors to further enhance the competitiveness of the quarto plate business.
Outokumpu will continue the precision strip operations in Dahlerbrück, Germany as before. Dahlerbrück serves a demanding customer base with high value added, tailored special materials. Today’s announcement is not directly related to the broader industrial restructuring plan that Outokumpu announced on October 1, 2013 to improve its financial performance in Europe.
Says CEO Mika Seitovirta: “Continued high level of Asian imports into Europe, high pricing pressure and sluggish economic outlook in Europe mean that we need to take further actions to drive down our costs. The planned measures in our operations in Kloster are painful but necessary actions to improve Outokumpu’s financial performance in this difficult market environment.”
Outokumpu will start negotiations with employee representatives in Sweden on the planned measures in full respect of local legislation and practices. The planned measures are expected to result in annual savings of approximately EUR 15 million.
Source: http://www.outokumpu.com/