18 March 2009 12:37 [Source: ICIS news]
DUSSELDORF (ICIS news)--LANXESS plans to save €250m ($325m) over the next two years by cutting employee wages and reducing production at unprofitable plants, the German specialty chemicals company said on Wednesday.
The company has agreed to global pay reductions of about 10%, which it said would account for €65m in savings in 2009 alone.
The working week for over 5,000 non-managerial employees at LANXESS’ German sites has been lowered to 35 hours from 37.5 hours starting in March, initially for one year. Workers would also lose out on bonus payments.
Salary reviews for managers and board members scheduled for 2009 would be suspended for at least six months, the company added.
LANXESS said short-time working had also been agreed for sites outside ?xml:namespace>
The cost-cutting programme, which the group calls “Challenge09”, was launched as a response to falling demand.
LANXESS has been running some plants at below full capacity and since the economic crisis hit demand from its key end-user markets in the fourth quarter of 2008.
“We are achieving further reductions in costs by way of numerous individual technical measures and process improvements in all areas of production,” said CEO Axel Heitmann, speaking at the group´s annual press conference.
“We can very largely adhere to our price-before volume strategy, even during the crisis,” said Heitmann. “So rather than generating unprofitable production volumes, we prefer to temporarily shut down the affected plant – as we are doing in
The company reported a net loss of €41m in the fourth quarter of 2008 and Heitmann said there was no clear way the first quarter would see an improvement in the company’s operations.
“There is no sign yet of a turnaround or recovery in demand,” said Heitmann. “One thing is clear: 2009 will be a highly unsatisfactory year for the entire chemical industry."
($1 = €0.77)
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