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In a “necessary but painful” development, REpower, the German subsidiary of Suzlon Energy, said it would cut as many as 750 jobs over the coming year or a little over a fifth of its personnel strength of around 3,300 employees.
The mid-term outlook for wind power equipment was expected to remain uncertain and volatile, the company said in an explanation. “The focus here is on measures for strengthening the efficiency and, hence, the future viability of REpower,” it said.
Andreas Nauen, chief executive officer of REpower Systems, said the long-term outlook for the sector remained strong. “The plans I am announcing will allow REpower to better meet today’s challenges and prepare for tomorrow’s opportunities, particularly in the offshore segment,” went his statement.
Suzlon, the parent company, recently signed a corporate debt restructuring package. REpower itself has a target to save as much as ¤100 million (Rs 706 crore) in 2013-14. REpower says these savings will have effects for the following years as well and create a strong economic base.
“We will apply leverage wherever we have recognised the need for action and will be able to realise savings potential in, for example, purchasing, production or manufacturing,” says Nauen.
REpower said the plan was to keep dismissals to a minimum. This would be via natural fluctuation, financial incentives for contract termination agreements and expiring fixed-term employment contracts.
In Germany, every company has a workers’ council, and there will be representation from them on this matter. Job cuts will have to be done in consultation with the council. E Balaji, managing director of Randstad India, said if clauses of redundancy had been a part of the original employee agreement, the employees would not be able to raise any questions.
“We will work together with the employee representatives to do everything to find fair, socially acceptable solutions for those affected by these cuts,” said Nauen. The German wind power equipment maker said it had set up a package that would allow it to draw on its strengths and keep investing in innovation.
Moving forward, REpower’s central functions will be arranged globally. Nauen feels this is a requisite for being able to react to market conditions quickly, with greater flexibility. “Only in this way will we remain a reliable partner, with products tailored to meet our customers’ requirements,” he said.
The parent company, Suzlon's Rs 9,500 crore debt restructuring has also made it streamline operations. In February, it had to close its rotor blade and control panel manufacturing units in Puducherry, due to adverse financial conditions.
