German propulsion and machinery giant MAN Energy Solutions has announced a comprehensive program to secure the future viability of the company. The program includes extensive cost-cutting and restructuring measures that could see almost 4,000 jobs lost.
MAN says it is preparing for a long period of stagnant sales as a result of Covid-19, and sees the restructuring as a necessary part of the company’s transformation into a solutions provider for sustainable energy supply.
We do not expect to see a recovery to pre-crisis levels until 2023
The company plans to cut its costs by Euros 450m ($520.4m), with an aim to achieve an operating margin of 9% and improve the company’s cash and liquidity position by 2023.
MAN says it intends to halt steam turbine production in Hamburg and may also close its production facility in Berlin. It also plans to reduce the cost of materials and equipment, optimise its service network, and streamline its product range.
As part of the cost reduction measures, it is expected that up to 3,000 positions in Germany and 950 positions elsewhere will be eliminated.
Dr Uwe Lauber, CEO of MAN Energy Solutions, commented: “We need to prepare ourselves for a market environment that will remain difficult for a long period of time. Some of the company’s key areas of business, such as the cruise ship business, have been directly affected by the economic impact of the Covid-19 pandemic and we do not expect to see a recovery to pre-crisis levels until 2023. The program is designed to address these negative market influences and make lasting improvements to MAN Energy Solutions’ ability to respond to market fluctuations.
“We have already begun to combat negative market influences in recent years and, as a result of the measures we have introduced, we have achieved and even exceeded our revenue targets. In terms of earnings, however, we haven’t yet reached our goal. Therefore, increasing our profitability and improving our competitive ability are key to continue successfully implementing our strategy for the future.”