01 February 2019
01 February 2019
Exel Composites’ subsidiary Exel has agreed with the local works council, Betriebsrat, to close production in the Voerde manufacturing facility in Germany by 30 April 2019.
The Voerde facility is Exel Composites’ smallest unit where composite profiles mainly to the telecommunications industry have been produced. As volumes have declined due to the continued challenging market situation of the telecommunications industry, the utilisation level of the Voerde facility has been low.
During February - April, production will be gradually transferred to other Exel Composites units to ensure an orderly transition with minimal impact on customers. As a result of closing production in Voerde, the employment of 23 permanent employees will be terminated. The company will offer them support in finding new employment.
The closure will result in annual cost savings of approximately EUR 1.0 million from 2020 onwards. According to preliminary estimations, the closure will result in a one-time cash cost of EUR 1.2 million that will be recorded in the first quarter of 2019. Furthermore, related to the annual impairment testing, an EUR 1.3 million write-off to goodwill and another EUR 0.3 million write-off to other balance sheet items will be recorded in the annual accounts of 2018.
The closing of production in Germany falls under the Group-wide cost reduction program initiated in 2018. In addition to optimising Exel Composites’ manufacturing footprint in Europe, the cost reduction program consists of improving the profitability and cost efficiency of the acquired DSC business as well as further synergy savings between the company’s two manufacturing units in China, among other things. The annual savings target of the program is EUR 3 million, expected to be fully effective in 2020.
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