LEDVANCE made an statement that it would continue its transformation after confirming the job cut at the headquarters in America last week.
The noted lighting provider intends to also reduce its headcount at the factories and headquarters in Germany so as to fully focus on developing profitable high-growth business segments.
The company and the employee representatives have already open conversations upon the changes. The management informed the employee representatives that around 1,300 of 2,300 jobs in Germany will be dismissed through the end of 2021.
The board stated the capacity utilization of LEDVANCE’s production sites globally is partially currently only at 20-40%, and thus the four factories in Germany will be consolidated into two. The sites in Berlin and Augsburg, mainly manufacturing conventional bulbs and fixtures, will be closed by the end of 2018, while the other two in Eichstätt and Wipperfürth will continue to run. The mechanical engineering in Augsburg is planned to be closed by the end of 2019.
“This (the transformation) will impact not only the employees in our prodcution sites, but also those in administration, the size of which must also be adapted to match our planned structures in manufacturing,” said the company in a board letter. The closures of Berlin and Augsburg sites will affect 900 jobs, of which 200 in the former and 700 in the latter. Despite the continued operation in Eichstätt and Wipperfürth, the two factories will also lose 300 jobs by 2021, of which 250 are in Eichstätt. Also within the capacity adjustment, about 100 job will be out of the corporate headquarter in Garching (by Munich).
“The rapidly declining demand for traditional products requires deep cuts in our manufacturing structures and administration,” expressed Jes Munk Hansen, CEO of LEDVANCE.
The company explained the trend of supplanting traditional lamps with LEDs is definite and driven by a myriad of factors, including the requirement of more efficient electricity use and competitive properties of LED light sources such as longer life span and rapidly declining prices. In addition, other factors such as legislative initiatives, urbanization, and digitization are also affecting the decision.
Considering that Europe calls for a stop on production of mercury lighting, incandescent and halogen lamps by 2020 and is gradually evolving into a smarter and more eco-friendly environment, LEDVANCE’s board planned the restructuring.
“LEDVANCE expects a decline in marekt volume for its traditional business by almost 90% by 2025. The situation demands quick and above all sustainable action,” said Hansen. “In addition to the planned measures, we have launched a stringent cost reduction program. In the future, we will focus on high-growth segments, meaning that we will intensively expand our business with LED lamps, integrated LED luminaires, and smart lighting solutions for example in the segment of Smart Home.”
The company saw the headcount reduction in every way painful but urgently necessary. The details will be developed in the coming months and will be closely coordinated with the employee representatives.