Staff sackings set for Heidelberg, Germany

1,300 jobs set to go around Germany as Heidelberg embarks on cost-cutting regime.

The management and employee representatives of Heidelberg have agreed on a reconciliation of interests and a redundancy plan for around 1,300 job cuts at the company's German sites in Heidelberg, Wiesloch/Walldorf, Amstetten, Brandenburg, Ludwigsburg, and Munchengladbach.

In addition to this, the management board has also forecast earnings between minus EUR 110 million and minus EUR 150 million for the 2009/10 financial year as a whole.

A reconciliation of interests and a redundancy plan were concluded at the Munchengladbach site back in August. A further 200 employees have agreed to leave the company on a mutually acceptable basis, making a total of 1,500 job cuts at the German sites in financial year 2009/2010.

The Management Board and executives are also foregoing remuneration to a comparable extent in order to help lower personnel costs. The agreed package of measures will result in these costs being cut by more than EUR 250 million during the current financial year compared to the previous year.

"Following constructive discussions, we have found a reasonable solution for everyone involved," said Heidelberg CEO, Bernhard Schreier, (pictured). "These painful cuts are essential to counter the effects of the most serious crisis of our industry and create a stable position for the company's future.”

In addition to the agreed severance arrangements, Heidelberg is offering all employees affected the opportunity to move to a transitional company for 12 months as of 1 March 2010. The measures now agreed with the Works Council and the IG Metall union will be implemented by the end of March 2010. All costs associated with this restructuring have already been incorporated in the accounts for financial year 2008/2009. The agreement on job cuts means that all the company's planned cost-cutting measures are under way. By financial year 2010/2011, this should generate annual savings in the order of EUR 400 million.

Andy Jensen, managing director of Heidelberg Australia/New Zealand said that the recent announcement from Heidelberg Germany on job cuts is in line with what was committed to and communicated by Heidelberg earlier in the year.

“HAN went through a cost saving exercise last year as ANZ was hit by the recession earlier than most other countries. We took steps to reduce costs in July/August 2008, reducing overhead costs by AU$8+ million,” he said.

“This included some reductions in headcount, but was mostly achieved through other measures and by not filling vacancies. Headcount reductions affected less than a handful of people in our service support area.”

Locally, Jensen has noted improved market developments and an overall more positive outlook in the economy which gives him confidence that HAN will not need to make any further reductions for now. “The measures we took last year and early this year are sufficient for the time being, as long as we remain cost vigilant,” he said.

“It goes without saying that we will face more challenges next year, should the major industry players remain in a CAPEX freeze and should lending institutions continue to shy away from our industry.”