LEDVANCE GmbH of Germany is continuing the process of moving the company away from the production of conventional lighting sources to LEDs. The company contends that LED solutions are being adopted at a much faster rate than expected. For this reason, LEDVANCE says it needs to make deep cuts in manufacturing and personnel. The company says it intends to concentrate its production in Germany in Wipperfürth and Eichstätt. As part of the continued restructuring, the company is reducing its headcount.
LEDVANCE says that it will develop the location specific details about the headcount reduction in the coming months and that the company will closely coordinate these details with the employee representatives. In Germany, the company says it has begun the initial conversations with employee representatives.
Planned Headcount Reduction About 1300 by End of 2021
The company’s management told the employee representatives that about 1,300 jobs in Germany will be affected with the headcount reduction measures through the end of 2021.
LEDVANCE says that its production sites globally are only operating at about 20 to 40 percent Therefore, the company plans to consolidate the manufacturing sites in Germany from four to two with the sites in Berlin and Augsburg to be closed by the end of 2018. LEDVANCE also plans to close the mechanical engineering performed at Augsburg by the end of 2019. So, a total of about 900 jobs will be lost in the Augsburg and Berlin, of which 700 are located in Augsburg and about 200 in Berlin.
While the company plans to continue production at sites in Eichstätt and Wipperfürth, LEDVANCE says that to ensure the profitability of the production sites it will have to further reduce the number of jobs by 300 by 2021. Of these jobs 250 are in Eichstätt. The company also plans to reduce the headcount at its corporate headquarters in Garching (by Munich) by about 100 jobs.
CEO Says Measures Continue LEDVANCE Transformation
“With these measures, we are consistently continuing the transformation of our company that began some years ago. The rapidly declining demand for traditional products requires deep cuts in our manufacturing structures and administration. This is the only way we can ensure our future viability. These measures are painful but urgently necessary. We want to work very closely with the employee representatives and together develop constructive and responsible solutions for the affected employees,” said Jes Munk Hansen, CEO of LEDVANCE.
LEDVANCE pointed out that the replacement of traditional incandescent lamps with LEDs is being driven not just because of the higher efficiency, longer life spans, and rapidly declining prices of LEDs, but also results from the legislative actions in Europe and several other parts of the world, which prohibit both incandescent and halogen lamps. LEDVANCE forecasts a reduction in its market volume for its traditional lighting business of nearly 90 percent by 2025. The company noted that this vastly reduced production influences the capacity utilization of the production sites and the company’s overall profitability.
“The situation demands quick and above all sustainable action. 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 lamps and smart lighting solutions for example in the segment Smart Home. To reach this goal, we must continue to strengthen our innovation ability and continue to invest in research and development,” Hansen stated.