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AkzoNobel Plans New Wave of Downsizing

Tuesday, September 10, 2013

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AkzoNobel continues to shrink its European footprint, with a new plan to close more than half of its German offices in the wake of recent divestments.

The struggling Dutch paint and coatings giant has announced three contractions in its business since June and now says it will "streamline its organizational structure" in Germany.

The next move will involve closing its eight German offices by the summer of 2014 and consolidating those operations into three new offices in Cologne, Hamburg and Stuttgart, the company announced Monday (Sept. 9).

AkzoNobel Germany AkzoNobel headquarters
Photos: AkzoNobel

AkzoNobel said its German operations (left) had developed a "highly fragmented footprint" over the years, due to mergers and acquisitions. More than 25 percent of its German workforce will be laid off.

In all, the recent and new moves will result in a 25 percent staff reduction in Germany, AkzoNobel said.

Cutting Costs

The decision is part of AkzoNobel's aggressive cost-cutting measures in the wake of continuing poor financial reports. Revenues, operating income, and earnings at AkzoNobel all declined in the first half of 2013, compared to the prior-year period.

"By bringing office-based management and supporting staff together in fewer locations and better aligning them with the needs of our businesses in Germany, we aim to improve our operational effectiveness as well as lowering overheads," said AkzoNobel Executive Committee member Werner Fuhrmann.

Closings and Sales

AkzoNobel announced June 26 that it would sell its network of 72 German paint stores to independent wholesale distributors. At the same time, the company signaled that it was "reviewing its office footprint" in Germany but said that it remained committed to the country's market.

"Germany has always been, and will remain, an important market for AkzoNobel," Fuhrmann said at the time.

In August, AkzoNobel announced that it would sell its Building Adhesives business to Sika AG for €260 million (about $348 million USD) following a "strategic review of the business' fit within AkzoNobel's portfolio."

AkzoNobel's largest market is Europe, but its presence there has been shrinking.

Nearly two-thirds of Building Adhesives' 550 personnel are based in Germany. The unit is a standalone business within the company's decorative paints business that primarily serves northwestern Europe.

That sale should be completed in the fourth quarter of 2013.

Later in August, AkzoNobel announced that it would shut down chemical production at its plant in Deventer, the Netherlands, by the end of 2016. Those production activities will be absorbed by AkzoNobel facilities in Europe, North America and China.

In April, AkzoNobel completed the $1.05 billion sale of its North American Decorative Paints business to PPG Industries.

German Plans

AkzoNobel currently has management, support and sales staff in eight locations across Germany: Börnsen, Cologne, Düren, Essen, Hannover, Ludwigsburg, Norderstedt and Wuppertal.

"This highly fragmented footprint is the result of various mergers and acquisitions that have occurred during the years," the company said.

Wehrner Fuhrmann

"Germany has always been, and will remain, an important market for AkzoNobel," AkzoNobel Executive Committee Member Werner Fuhrmann has said.

AkzoNobel's main offices in Germany will be sited at a new location in Cologne, providing workspaces for around 250 people. Sales offices in the north and south of the country will be consolidated in Hamburg and Stuttgart.

The company will also "align the supporting management and staff functions for the country with the organization's changing dimensions," eventually laying off more than 25 percent of its personnel in Germany, it said.

The moves should be complete by summer 2014.

"The need to further streamline our organizational structure in Germany has become increasingly clear in light of recent developments," continued Fuhrmann.


Tagged categories: AkzoNobel; Business management; Decorative coatings; Economy; Market share; Workers

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