Lonza to cut 500 jobs
Visp bears the brunt of restructuring
Lonza revealed in its Q3 results announcement that it is to implement a series of measures at its largest site at Visp, Switzerland, leading to 400 job cuts over the next two years. Full details are to be announced shortly. This comes in addition to about 100 jobs that are already going across the company after a review of corporate functions.
“We want to assure that Visp remains a long-term competitive and profitable site with attractive work places,” said CEO Richard Ridinger. “We will focus all activities on value creation, by reducing the complexity of the site, improving the cost structure and flexibility. This will also include a review of business models and optimisation of the portfolio. These measures will help increase profitability and make Visp a competitive site.”
Last year, the company initiated VispChallenge in response to the problems specific to Visp. In August, while announcing its 1H results, it said that Beat In-Albon, who had just returned to the company as COO of the Life Science Ingredients sector after a period at SGS, would have specific responsibility for Visp. This is the first tangible result of his new role.
Although Visp has good capacity utilisation levels, Lonza admitted that its profitability in recent years has been “unsatisfactory”. As well as the strong Swiss franc, high oil and energy costs and heavy competition from low cost manufacturers, it is also “exposed to a sub-optimal product portfolio as well as to a challenging site complexity”, the company stated.
Most of the redundant employees are expected to be offered internal transfers, while natural attrition, early retirements and reducing the number of temporary workforces may further reduce the impact. Consultations with unions are ongoing and were expected to be completed within November. Lonza will then review its global manufacturing operations and introduce similar improvement programmes to other sites.
Lonza added that its Q3 performance was in line with expectations. Capacity utilisation was on target in all sectors “despite some macroeconomic challenges and tight inventory control at customers” and full-year targets are expected to be met. The company also managed to refinance its bridge loans on favourable conditions. Arch Chemicals continues to be integrated with 90% of the synergy measures already implemented.
The company has played down revived rumours that it might be in discussions with suitors interested in a takeover bid. BASF and Sabic were both linked with it earlier in the year and have not commented but Lonza chairman Rolf Soiron said “The rumours have been plucked out of thin air. There are and were no talks, not to mention negotiations”.