The majority from its manufacturing facility in Visp, Switzerland
Lonza is to cut 500 jobs over the next two years as it implements a series of productivity improvements.
The firm will axe 400 positions at its facility in Visp, Switzerland, which manufactures chemical intermediates and active pharmaceutical ingredients, as part of the VispChallenge programme announced in 2011, which aims to save CHF100m (€83m; US$107m) by 2015, and a further 100 jobs worldwide.
Lonza said Visp has good capacity utilisation and is its largest facility, but profitability over the past few years ‘has been unsatisfactory’, owing to the strength of the Swiss franc, competition, and higher oil prices and energy costs. It is also exposed to a ‘suboptimal product portfolio’ and a ‘challenging site complexity’.
The majority of the job cuts at Visp will come from internal transfers, early retirements, and a reduction of the number of temporary contracts.
A further 100 jobs will go over the next 24 months following a review of Corporate Functions during the summer.
We will focus all activities on value creation, by reducing the complexity of the site, improving the cost structure and flexibility
‘We want to assure that Visp remains a long-term competitive and profitable site with attractive work places,’ said chief executive Richard Ridinger. ‘We will focus all activities on value creation, by reducing the complexity of the site, improving the cost structure and flexibility.
‘This will also include a review of business models and optimisation of the portfolio. These measures will help increase profitability and make Visp a competitive site. These critical measures will unfortunately also require a reduction of 400 positions within 24 months.’
Following this ‘productivity improvement programme’ in Visp, Lonza said it would review its global manufacturing footprint and introduce similar improvement programmes to other sites globally.
Lonza made the announcements as it revealed its financials for the third quarter, which were at an ‘expected level despite some macro-economic challenges and tight inventory control at customers’.
Underlying business growth is on track with newly signed contracts and increasing market demand for our new technologies
‘Underlying business growth is on track with newly signed contracts and increasing market demand for our new technologies,’ said Ridinger.
‘While we are making good progress in our short-term cost reduction programmes, we were also able to drive our deleveraging with the long-term refinancing of our bridge loans. Also, I am pleased with the progress we are making integrating the Arch business, with 90% of synergy measures already implemented.’