Finland-based stainless steel producer Outokumpu has announced plans for further structural changes that will result in up to 1,000 additional job reductions in Europe, bringing the total planned global reduction to 3,500 jobs. The industrial plan is expected to generate additional savings of more than €100 million and the overall savings programs are expected to result in annual savings of €300 million in 2014 and €450 million in 2017.
While Outokumpu has already implemented significant cost savings as a result of the merger between Outokumpu and Inoxum at the end of 2012, the company's cost structure continues to be unsustainably high in the current market environment.
According to Outokumpu,stainless steel market has remained challenging during 2013, mainly driven by the continued economic weakness in Europe and the global overcapacity in the industry. Outokumpu has continued to be heavily loss making in 2013, with a net debt of €3 billion at the end of June 2013. Industry overcapacity and imports from Asia continue to put pressure on prices and profitability and there are no signs of a material improvement in the market environment. For example, in Europe alone, there are more than 1,500,000 mt of overcapacity in cold rolled production. In addition, as previously stated, the Terni remedy requirement by the European Commission resulted in lower synergy potential than originally planned.
Therefore, Outokumpu is now introducing a new industrial plan and efficiency measures for its operations in Europe. The company plans to accelerate the Bochum melt shop closure in Germany to achieve more efficient production structure and higher capacity utilization rates. Annealing and pickling capacity by will be reduced by 200,000 mt in Finland and cold rolling capacity by 300,000-350,000 mt in Germany to increase capacity utilization and to lower costs. The planned changes also include optimization of company's service center network by closing service centers in Barcelona, Spain and in Langenhagen, Germany and further cost savings through leaner overhead and organization in all sites, functions and activities across the European operations.