Solvay implements cost-cutting, efficiency plans
Source | Solvay
Solvay (Brussels, Belgium) announced on May 15 that it will deepen and accelerate efficiency plans for its Composite Materials unit to reduce costs, improve productivity and better serve customers in light of reduced activity caused by the COVID-19 crisis.
Building on measures already implemented earlier this year, Solvay's Composite Materials business intends to cease industrial operations at its plants in Manchester, U.K., and Tulsa, Okla., U.S. Those activities will be transferred to other Solvay facilities, increasing capacity and improving operational efficiency. In addition, job reductions are being implemented across the business; total headcount will likely reduce by approximately 570 positions, or around 20% of its workforce.
Solvay says these structural changes will 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 will result in annualized cost savings of approximately €60 million. A restructuring charge of around €30 million will be taken in Q2.
Over the past year, Solvay’s Composite Materials business already improved operational efficiencies by increasing productivity and advancing automation. Furthermore, a cost-reduction program was implemented in response to reduced production of the 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 the coronavirus pandemic. The current crisis has triggered an industry-wide reduction of demand for civil aircraft for the near term.
“The decision to part company with employees is never one that we take lightly," says CEO Ilham Kadri. “The steps we are taking are necessary to adapt to the dynamic environment and ensure that Solvay is competitive and strongly positioned to meet our customers' needs as growth eventually resumes — which it will.”