The key manufacturer Dormakaba has to make huge savings
The globally active locking technology group Dormakaba, which has production plants in Rümlang and Wetzikon in the Canton of Zurich, has to step on the brakes and reduce its workforce by a good ten percent.
According to the company's press release, "Dormakaba is launching a transformation program to further drive customer focus and strengthen the company for the future to achieve its medium-term goals. As a result, the company expects cost savings of approximately CHF 170 million and a net reduction of up to 800 full-time positions by 2025/26." The move is intended to further consolidate the global production structure, reduce the number of suppliers, improve sourcing capabilities and refocus product development through a single global plan, according to the July 3 media release.
Reduction of up to 1800 jobs
The industrial group is one of the world's three leading suppliers in the locking technology sector and employs a total of almost 16,000 people. According to information, there is talk of a reduction of up to 1800 jobs. However, Dormakaba also intends to recruit people, which corresponds to a net loss of 800 jobs.
Investors welcome the move
According to Dormakaba, the transformation program is designed to ensure that medium-term financial targets are achieved: The executive team, led by CEO Jim-Heng Lee, is targeting annual sales growth of three to five percent for each future fiscal year and an adjusted Ebitda margin of 16 to 18 percent to be achieved in fiscal 2025/26; there is also talk of a return on capital of more than 30 percent from fiscal 2025/26 onwards. Officials said the transformation program is expected to lead to estimated cost savings of around 170 million Swiss francs annually by the end of 2025/26, which the investment community has welcomed: The share price rose by 4.5 percent to 420 Swiss francs by the close of trading following publication of the announcement on July 3.
Time to market is shortened
The transformation program is aimed at increasing network and production efficiency and expanding measures to improve procurement. It also includes the establishment of shared service centers for finance and human resources, which will be located at sites with lower labor costs. This means that the headquarters in Rümlang ZH will probably also have to make concessions. The new organizational structure will bundle all research and development (R&D) activities and shorten the time to market, according to the announcement.
According to the Group's management, all organizational changes will come into effect gradually from 2023/24, as soon as negotiations with the respective employee representatives have been concluded in a socially acceptable manner, the Group writes. (rs)
