Woodworking machinery giant to cut 600 jobs20 November 2023
The world’s largest manufacturer of woodworking machinery Homag is cutting 600 jobs worldwide in response to a reduced order intake.
Roughly 350 of the 600 jobs are to be eliminated at the German facilities. In Germany, this is to be done by means of voluntary programmes as well as phased-retirement models to reduce social hardship. Lay-offs for operational reasons are currently not planned but cannot be ruled out.
In addition to reducing jobs, the Homag Group also plans to make use of other flexibilization instruments such as the reduction of working-hour accounts and short-time work and has imposed an extensive freeze on new recruitment.
“After extraordinarily heavy capital spending by our customers in 2021 and 2022, we had anticipated a cyclical downswing,” said Dr Daniel Schmitt, Homag CEO.
“However, with order intake down by almost one third worldwide, this downturn is substantially more pronounced than expected.”
The cuts are expected to produce savings of around €25m next year and roughly €50m per year from 2025.
Between January and September 2023, order intake decreased by 32% to €968m. In terms of sales, which increased slightly again compared to the previous year’s high figure to €1.22bn, the Homag Group continued to benefit from the very large order backlog that it had amassed at the beginning of the year.
This order backlog was gradually run off, dropping to €832m as of September 30, 2023 (September 30, 2022: €1.25bn). At €93.2m, EBIT before extraordinary effects remained at the previous year’s high level (€92.4m).
“The sharp decline in order receipts will hit us with a delayed effect and result in a substantial decline of up to 15% in sales in 2024,” explained Dr Schmitt.
“With this package of measures, we want to adjust our cost structure so as to limit the impact on our earnings. We stand to benefit from this in the medium and long term and will grow again profitably when the next upswing emerges.”