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Cargotec to retrench at MacGregor

Cargotec launches a programme to achieve annual cost savings of approximately €25M in MacGregor
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Cargotec is beginning statutory cooperation negotiations to achieve the desired cost reductions. According to preliminary estimates, says Cargotec, "efficiency improvement actions seek the reduction of around 260 full-time equivalent posts globally," MacGregor employed globally 2355 persons at the end of September 2016, so the intention is that more than 10% of the global workforce will go.

The objective of the savings is to adapt to the prevailing market situation faced by MacGregor. In addition, the aim is to ensure long-term competitiveness on global markets and to continue the improvement of operational efficiency.

MacGregor's market situation is challenging, says Cargotec. "In the offshore industry, the low price of oil keeps investments at an unprecedentedly low level, which affects the demand for offshore load handling solutions. The demand for service has declined as parts from decommissioned ships are increasingly being used as spare parts. There is overcapacity on global merchant ship markets, and orders for new vessels are at an exceptionally low level, which decreases the demand for MacGregor's products and solutions.

"Cost savings are sought through the planned restructuring of operations and potentially with personnel reductions. It is estimated that the measures affect especially the operations in Norway, China, Sweden, Finland and Singapore. The planned savings measures are estimated to result in restructuring costs in the final quarter of 2016 and in 2017."

Michel van Roozendaal, President of MacGregor, said: "Even in this challenging market situation MacGregor is the leading and the strongest player in the maritime cargo flow, mooring and load handling markets. As a result of these difficult but necessary actions MacGregor will become more agile. We have strong competence to help our customers operate more efficiently."

Reporting Cargotec's results to the end of September, CEO Mika Vehviläinen noted that "the challenging market situation continued in MacGregor. The global merchant ship market is facing overcapacity and new ship orders are at an exceptionally low level. Industry consolidation, alliances and possible new ship routes create uncertainty in the industry. We are continuing with our measures to lower the MacGregor cost level."

However, he added that Hiab's strong development continued during the Q3 2016 and profitability improved compared to the previous year. 2Hiab's core business orders were at a good level, but we did not receive any big defence industry orders as we did during the comparison period."

He continued: "Kalmar's result was also satisfactory; however, the pace of customer decision-making has slowed down, which could be seen in declining order numbers. Kalmar's long-term market potential is still strong: bigger ship sizes and the need to develop ports and make operations more effective require investments in port technology and automation. The number of potential projects is still large, but customers are delaying their investment decisions."

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