- LED solutions are replacing traditional lighting products at a much faster rate than expected
- Deep cuts in manufacturing and personnel needed
- Production in Germany will be concentrated in Eichstätt and Wipperfürth
- Focus on developing high-growth business segments
LEDVANCE GmbH (LEDVANCE), one of the world's leading general lighting providers for professional users and end consumers, is continuing its transformation and thereby intends to reduce its headcount. The location specific details of the headcount reduction will be developed in the coming months and will be closely coordinated with the employee representatives.
In Germany, initial conversations with the employee representatives have already begun. The management informed the employee representatives that roughly 1,300 jobs in Germany are to be affected by these measures through the end of 2021. Despite earlier restructuring efforts, the capacity utilization of LEDVANCE’s production sites globally is partially currently only at 20 to 40 percent. For this reason, the production sites in Germany are to be consolidated from four to two. The sites in Berlin and Augsburg are to be closed by the end of 2018. The mechanical engineering in Augsburg is planned to be closed by the end of 2019. The planned closures will lead to a total of about 900 jobs being affected in Augsburg und Berlin, of which 700 are located in Augsburg and about 200 in Berlin. The sites in Eichstätt and Wipperfürth are planned to be continued. The profitability of the production sites in Eichstätt and Wipperfürth is to be secured. This will require the reduction of further 300 jobs by 2021, of which 250 are in Eichstätt.
Within the planned production capacity adjustment, a downsizing of the German corporate headquarter functions is also planned. Consequently, about 100 jobs, in Garching (by Munich), are to be affected.
“With these measures, we are consistently continuing the transformation of our company that began some years ago. The rapidly declining demand for traditional products requires deep cuts in our manufacturing structures and administration. This is the only way we can ensure our future viability. These measures are painful, but urgently necessary. We want to work very closely with the employee representatives and together develop constructive and responsible solutions for the affected employees,” said Jes Munk Hansen, CEO of LEDVANCE.
The substitution of traditional lamps with LED is being driven not only by the higher efficiency, longer life spans, and rapidly declining prices of LEDs, but also by legislative initiatives in Europe and several other parts of the world, that not only prohibit the incandescent- but also the halogen lamp. LEDVANCE expects a decline in market volume for its traditional business by almost 90 percent by 2025. This development not only impacts the capacity utilization of the production sites, but also the company’s profitability.
“The situation demands quick and above all sustainable action. In addition to the planned measures, we have launched a stringent cost reduction program. In the future, we will focus on high-growth segments, meaning that we will intensively expand our business with LED lamps, integrated LED lamps and smart lighting solutions for example in the segment Smart Home. To reach this goal, we must continue to strengthen our innovation ability and continue to invest in research and development,” Hansen explains the next steps for LEDVANCE.