Industrial Solutions steps up transformation program

The chief aim is to sustainably increase the business area’s competitiveness.

The Industrial Solutions business area, the engineering, construction and naval shipbuilding arm of the thyssenkrupp Group, is systematically continuing its planets transformation program launched in 2016.

To this end structural costs are to be cut, overcapacities reduced, and targeted growth and purchasing initiatives driven forward. This process will mean that over the next three years, in addition to the previously announced reduction of up to 500 jobs in the administrative area, up to 1,500 further job cuts will be made in operational areas, two thirds of them in Germany.

Dr. Peter Feldhaus, CEO of Industrial Solutions: “Our market environment is constantly changing. There are many opportunities, but the competitive pressure is enormous. To ensure Industrial Solutions can compete in the market over the long term, we need a more efficient and effective set-up that goes for our cost structure as for our global presence. Although new orders have recovered from their trough, our structures are still oversized measured against orders in hand and our medium-term requirements. We must be able to respond more flexibly to fluctuations in order intake.”

Under a Group-wide benchmarking project in the administrative area, Industrial Solutions had already identified a potential reduction of up to 500 jobs, of which up to 300 in Germany, back in July 2017. However, the restructurings now announced relate to operational areas. Altogether the planned measures are aimed at strengthening the business area’s earning power by up to €200 million per year over the next three years. In the short term the measures are focused above all on the plant engineering business and naval shipbuilding operations, which have been particularly affected by underutilization and low profitability due to slow order intake in recent years. The automotive systems business, like the auto industry as a whole, is having to refocus in connection with the move towards electric vehicles. The strategy needed for this is to be developed in the coming months.

“We need to sustainably reduce our costs to become internationally competitive again. The transformation process under way will make us faster, more flexible, and more efficient in our markets in the future so that we can better cater to our customers’ rising requirements. We are also expanding our service business. This will enable us to generate more stable earnings over the long term so as to achieve our profitability and growth targets,” says Dr. Peter Feldhaus.

The Industrial Solutions business area board has already presented its plans to the responsible employee representatives. Talks will now be held with the codetermination bodies to consider how the joint goal of reducing the workforce in a socially responsible way can best be achieved.