Lanxess implements first phase of realignment; to cut 1,000 jobs

German specialty chemicals firm Lanxess has started implementation of the first phase of its planned-three-phase realignment program. In the first phase, aimed at improving the competitiveness of the business and administrative structure, the Group plans to make total annual savings of Euro 150 million as of the end of 2016. Lanxess already expects savings of about Euro 20 million in the current year.
 
The first phase of the realignment will result in a reduction of total headcount by about 1,000 positions worldwide by the end of 2016 – roughly half of which will be in Germany. The affected jobs will be mainly in the administrative and service units, marketing and sales, as well as in research and development. The headcount reduction will result in exceptional charges of Euro 150 million being incurred through the end of 2016 – including around Euro 100 million already in 2014.
 
Matthias Zachert, Chairman of the Board of Management of Lanxess AG, said, “The realignment lays the foundation for Lanxess to return to sustainable growth in the mid-term. Downsizing the workforce is a necessary measure to improve our competitiveness.”
 
Rainier van Roessel, Member of the Board of Management and Labor Relations Director of Lanxess AG, added, “These job reductions are tough. However, we have reached a fair agreement with the employee representatives in Germany after a series of constructive negotiations.”
 
As of today, solutions have already been found for more than half of the roughly 500 employees affected in Germany. If the targeted number of job cuts has not been fully achieved when the severance program expires in a few weeks’ time, the group cannot currently rule out dismissals for operational reasons. 
 
At its sites outside of Germany, too, the group will implement the headcount reduction responsibly under country-specific arrangements.
 
At the beginning of November 2014, Lanxess initiated the second phase of the realignment program, which is aimed at increasing its operational competitiveness. This phase focuses on the optimisation of sales and supply chains and of production processes and facilities. The relevant measures will be implemented in 2015 and 2016. 
 
The third phase of the program, which is aimed at improving the competitiveness of the business portfolio, will focus on horizontal and vertical cooperations in the rubber business. This phase is also to be implemented in 2015 and 2016.
 
“As of 2016, we will fully benefit from the savings made as a result of the realignment. We can then start thinking cautiously about growth again – with the focus on our Advanced Intermediates and Performance Chemicals segments," said Zachert.