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AkzoNobel Plans Global Restructuring

Friday, October 4, 2013

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Having wrapped the sell-off of major segments of its architectural coatings division, AkzoNobel has announced plans to aggressively reorganize and streamline the rest of the business by the end of the year.

The company is promising a "streamlined management structure" and lean "new operating model" for its Decorative Paints division beginning Jan. 1, 2014.

Early details are few, but the goal is to build a "more competitive Deco business" in Europe and "high-growth markets" following the billion-dollar sale of its North American Decorative Paints unit to PPG Industries earlier this year, the Dutch-based paint and coatings multinational announced Wednesday (Oct. 2).

AkzoNobel - Brazil
Photos: AkzoNobel

AkzoNobel's Decorative Paints unit will focus on Europe and high-growth markets like Brazil (pictured).

The restructuring announcement was the latest jolt to the company's Decorative Paints division, which includes architectural coatings, wood-care and specialty products, and "pre-deco" products such as sealants and putties.

The business has had a tumultuous year, in addition to the North American deal.

Sales and Deals

In June, the Decorative Paints business announced plans to divest its 72 German paint stores to independent wholesale distributors; that plan then prompted another announcement about streamlining German operations.

In August, the company said it would sell off its Building Adhesives business, a standalone business within Decorative Paints, to Sika AG for €260 million ($353 million USD).

Completion of the Sika deal, announced Tuesday (Oct. 1), cleared the way for the business's worldwide reorganization announced the next day.

'More Agile and Competitive'

"The planned changes represent the critical next phase in simplifying the organization and making it more agile and competitive...," AkzoNobel said in its announcement.

The changes, due to take effect Jan. 1, are aimed at creating a "leaner organization," said Ruud Joosten, the company's Executive Committee member responsible for Decorative Paints.

The moves will include "reducing the number of senior management teams" and collapsing the business's eight regions into five: North and Central Europe, South East Europe and Africa, India and South East Asia, Latin America, and China and North Asia.

In addition, the company will centralize a number of key global functions—human resources, research and development, supply chain, finance, sourcing and information management—in order to "bring about significant cost savings and efficiency benefits," AkzoNobel said.

Sika AG

AkzoNobel has closed the $353 million sale of its Building Adhesives business to Sika AG.

The company currently has 55,000 employees across 80 countries. In 2005, the Decorative Paints sector accounted for more than 45 percent of the company's sales.

Strategic Ambitions

"We divested our North American activities to focus on key markets in Europe and the world's high-growth regions, and this intended reorganization of our management set-up and operating model is a major step towards reducing complexity and making us stronger," said Joosten.

"Our intention is to put in place a structure which fits our strategic ambitions for the business and will help propel us towards achieving a level of profitable growth in line with our 2015 targets."

Ruud Joosten

The company wants a "leaner organization" as of Jan. 1, said Executive Committee member Ruud Joosten.

Streamlining the organization "will also make us better equipped to build our brands, increase market penetration and become more competitive," he added.

Although it did not estimate a potential number of layoffs or site closings, the company warned that the impending changes would "involve a number of potential relocations" and said it was currently meeting with its labor councils to map specific changes.

   

Tagged categories: AkzoNobel; Architectural coatings; Business management; Business operations; Decorative painting

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