Metso plans up to 1,300 layoffs, outsourcings

Helsinki, Finland—Metso Corp. reports that it’s planning to layoff or outsource as many as 1,300 employees at its Metso Paper division’s Nordic and North American operations to help it reduce expenses and regain profitability.

By Control Engineering Staff July 6, 2004

Helsinki, Finland— Metso Corp. reports that it’s planning to layoff or outsource as many as 1,300 employees at its Metso Paper division’s Nordic and North American operations to help it reduce expenses and regain profitability. Approximately half of the job cuts will consist of layoffs, while the other half will include outsourcing and “actions comparable to outsourcing.” More details about Metso Paper’s downsizing will be presented at the firm’s January-September interim review on Oct. 28, 2004.

Metso Paper’s layoffs and outsourcings are part of an efficiency improvement program it started in June 2003. The division is seeking to reduce its annual fixed costs by 50 million euros. Measures to improve the division’s profitability are scheduled mainly for 2004-05. Metso Paper plans to improv its administration and production efficiency by combining functions; focusing on the production and assembly of core components; and simultaneously strengthening its presence in new, growing markets.

Metso adds that it’s aiming for a 6% operating profit and at 12% return on capital employed (ROCE) in 2005. Operating profits for its divisions are expected to be 5% for Metso Paper; 7% for Metso Minerals; 8% for Metso Automation; and 6% for Metso Ventures.

“Our operational and financial targets for 2005 will improve Metso’s profitability, but this profitability level is not enough for a global market leader. We’re concentrating on building a sustainable base for a significant profit improvement in the long run,” says Jorma Eloranta, Metso’s president and CEO.

Started in 2003, Metso reports that its efficiency improvement program is complete at Metso Automation. Meanwhile, Metso Minerals’ and Metso Ventures’ efficiency improvement programs are also either underway or already implemented. Savings resulting from Metso’s overall efficiency improvement program are estimated to be slightly more than 100 million euros.

“The profitability of Metso Minerals and Metso Automation is already developing in the right way. In these business areas we will continue with our determined efforts in the same direction. Actions aiming at the improvement of Metso Paper’s profitability and the strengthening of competitiveness will continue. Our divestiture of Dynapac, which is happening quickly, will strengthen Metso’s balance sheet. In addition, we have renewed Metso’s loan portfolio in the beginning of the year, and lengthened the maturity structure of our loans,” adds Eloranta.

Metso Minerals will concentrate on implementing efficiency improvement measures around its mineral processing, crushing and screening business, which has already improved its profitability, and the expanded wear and spare parts businesses. Metso adds that its metal recycling equipment and drilling businesses will continue to develop based on market conditions. Similarly, Metso Automation also will seek to grow through continuous improvement. Metso Ventures will continue as one of Metso’s development tools.

Control Engineering Daily News DeskJim Montague, news editorjmontague@reedbusiness.com