Comprehensive restructuring program at Buderus Edelstahl in Wetzlar

2019-12-18 |

For Buderus Edelstahl, a voestalpine Group company, the economic conditions have deteriorated massively. In order to safeguard the international competitiveness of the special steel producer, the company management feels compelled to initiate a further restructuring program in the coming year in addition to the ongoing cost reduction and efficiency improvement measures. The plan is to reduce the proportion of in-house production within a product area, which will also be accompanied by an adjustment of the workforce. Over the last ten years, voestalpine has invested over EUR 300 million in the future viability of the plant.

The current cost burdens at the Wetzlar site, combined with falling demand and high price pressure for our products, are forcing us to act quickly. The aim of the restructuring in production is to lead the company to a stable and sustainable basis and make it competitive again. Naturally, we will do everything in our power to work out socially acceptable models for the employees affected."

Franz Rotter, Member of the Management Board of voestalpine AG and Head of the High Performance Metals Division

As a result of the economic downturn in Europe, Buderus Edelstahl is confronted with a sharp decline in market development in its key customer segments of automotive, commercial vehicles, mechanical engineering and toolmaking. Massive price pressure due to production overcapacity on the European stainless steel market and increased imports from third countries as a result of global trade conflicts are exacerbating the situation. Added to this are gradually rising location costs, such as the development of electricity and grid costs in the federal state of Hesse, which are not economically feasible for an export-oriented company such as Buderus Edelstahl (over 50 percent exports). In particular, the changed market conditions are affecting the product hot-rolled strip, which is primarily used in the automotive industry.

Reduction of in-house production in the hot-rolled strip area

Against this background, it was decided at today's meeting of the Supervisory Board of Buderus Edelstahl to significantly reduce the proportion of in-house production in the hot-rolled strip area (hot rolling mill) by summer 2020 and at the same time to significantly improve processes in all other production areas. The reduced capacities in the production process are to be covered by acquisitions on the market in the future in order to remain competitive in the long term and thus retain the hot-rolled strip product in the portfolio. As part of this measure, there will also be personnel adjustments at the Wetzlar site, which will include administrative and technical areas in addition to production. Of the current total of 1,500 employees (full-time equivalents), around 325 people could be affected. Specifically, the temporary employment contracts of 125 employees will expire by the end of the financial year. In the coming weeks, a corresponding redundancy plan will be drawn up together with staff representatives for a further 200 employees. Among other things, it is planned to transfer these employees to a transfer company to be set up specifically for this measure to support them in their subsequent job search. The workforce will be informed of the planned steps by the management.

Buderus Edelstahl GmbH

Buderus Edelstahl GmbH, part of the High Performance Metals Division of the voestalpine Group since the takeover of the Böhler-Uddeholm Group in 2007/08, is based in Wetzlar and specializes in the production of high-quality stainless steels. With a capacity of up to 350,000 tons of crude steel per year, the company covers the entire process chain from steel melting and forming to the end products, such as tool steel, engineering steel, open-die forgings, closed-die forgings, hot-rolled strip, cold-rolled strip and rolled semi-finished products. The most important customer groups include the automotive, mechanical engineering, toolmaking, household appliance and energy industries. Over the past ten years, voestalpine has invested around EUR 300 million at the site, including in the comprehensive modernization of the steel mill, the digitalization of all operational areas and the extension of the value chain. Buderus Edelstahl generated revenue of EUR 442 million in the business year 2018/19.

The voestalpine Group

In its business segments, voestalpine is a globally leading technology group with a unique combination of materials and processing expertise. voestalpine, which operates globally, has around 500 Group companies and locations in more than 50 countries on all five continents. It has been listed on the Vienna Stock Exchange since 1995. With its top-quality products and system solutions using steel and other metals, it is a leading partner of the automotive and consumer goods industries as well as of the aerospace and oil & gas industries. voestalpine is also the world market leader in complete railway systems as well as in tool steel and special sections. In the business year 2018/19, the Group generated revenue of EUR 13.6 billion, with an operating result (EBITDA) of EUR 1.6 billion; it had just under 52,000 employees worldwide.