Metso targeting annual savings of around EUR 100 million through its global efficiency program

“This program is part of our continuous efforts to improve Metso’s productivity and maintain the competitiveness of our businesses in today’s volatile market environment,” says Kähkönen. “Procurement, for example, has been a focus area for us for a while, and work in this area will continue after we have achieved the savings currently being targeted. We began to see a slow-down in investment activity in the mining sector back in summer 2012 and have been addressing this issue in a number of ways, and the results of this work have been reflected in the profitability of our Mining business from early 2013. Our Automation business has also been reacting to changes in the pulp and paper industry, and the results of the measures that have been taken can be seen in the business’ current performance. In addition, in preparation for the demerger, we are reviewing our overall cost structure to ensure its viability in helping Metso succeed even better in the future.”

The actions taken under the program are expected to affect personnel and locations worldwide and target cost savings of around EUR 60-80 million. Measures that have already been announced, together with new ones, include:

Mining and Construction:

• Divestment of parts of industrial conveyor belt manufacturing and related sales and services operations in Northern Europe (press release on September 3, 2013). A total of 340 employees to be transferred to the buyers of these operations after closing.
• Restructuring of metal recycling operations in Düsseldorf, Germany. Negotiations are under way and could affect about half of the location’s personnel of 310.
• Employee negotiations to study the future of the foundry operations and machining workshop in Tampere, Finland (press release on October 21, 2013). The final measures (temporary lay-offs, permanent reductions, transfers, divestments, etc.) will be decided in the negotiations, which cover a total of 240 employees.
• Restructuring of the EMEA (Europe, Middle East, Africa) organization.
• Transfers or closures of small local operations and streamlining of organizations.

Automation:

• Streamlining and adapting the Process Automation Systems business and Automation’s European organization to the structural changes affecting the pulp and paper industry. These measures could lead to a reduction of 100 jobs globally, of which 40 are in Finland (press release on October 21, 2013).

Support functions and Head Office:

• Metso’s new strategy calls for a more integrated Group and, as a result, all support functions have been reorganized to match this strategic goal. The target is to both improve the efficiency of the support functions while simplifying processes and cutting costs. Results from these are expected to be visible in 2014.  As part of support function integration a number of tasks from the segments will be incorporated into Metso Group. At the same time, however, the Head Office will be resized to match needs of Metso following the demerger.

Global procurement:

• A program to improve the efficiency of Metso’s global procurement activities is under way, targeting annual savings of around EUR 30-50 million. Between EUR 20-30 million is expected to be achieved in 2013.

Metso will monitor the progress of the efficiency program regularly.