Dutch shipbuilder and maritime equipment supplier, Royal IHC on Friday said it plans to cut about 425 jobs and lay off its COO, as the company is “fine-tuning” its strategy in “poor market conditions.”
IHC said a statement it is increasingly outsourcing production activities in order to remain distinctive and cost-efficient in its marketing of ships, equipment and services, with product development and design, as well as sales and marketing remaining within the company.
This adjustment in strategic direction will have an impact on around 425 employees in The Netherlands. The management of IHC is talking about this with Works Council and trade associations.
“At staff meetings at all locations, the management will today provide staff with further details of its intentions,” the company noted in the statement.
The Works Council and trade associations have been notified about the plans for downsizing. IHC has agreed with the Works Council and trade associations on a series of dates to discuss the timeline and conditions.
“The management fully understands the major consequences the necessary measures will have for many employees. Of course, any IHC staff who become redundant will be given full support in moving towards the next step in their careers.”
Turbulent times
Economic developments in the markets in which IHC operates continue to be “extremely turbulent.”
As in 2015, the oil price and increasing international competition in particular have led to a significantly lower order intake in the first nine months of 2016 than anticipated, IHC said.
IHC has already announced that it expects to remain below the forecast sales budget for the whole of 2016. The associated low level of turnover makes it necessary to drastically cut costs, particularly in support positions within the organisation.
In addition, the company’s section-building activities will be further outsourced in order to respond to competition from Eastern Europe and Asia. IHC will maintain the shipbuilding slipway in Krimpen as its main slipway. The Kinderdijk slipway will be maintained as a reserve. In response to the economic situation and the need for cutbacks, the Executive Board is being reduced to two members: CEO Dave Vander Heyde and CFO Arie Vergunst.
“Smaller company”
IHC said it expects to emerge from this downsizing process as a “smaller and healthier company.”
In the period ahead, IHC will be focusing on boosting its sales activities. In addition, IHC units that are currently thriving, such as Beavers, IQIP and Services, will be given space to maximise their potential for growth.
Furthermore, IHC said it aims to expand its international activities.
“In Brazil, IHC has now developed a solid base for itself in terms of market position and technological innovation.”
“By expanding its international activities, IHC is responding to its customers’ growing preference for more “local for local” design and construction. This will also ensure that existing local market potential is properly exploited,” the company added.