DSM will cut around 500 jobs at its Chemelot site in Geleen, the Netherlands over the next two years, in an effort to cut costs by over €50 million per annum. The jobs will largely go in support services and manufacturing staff departments.
The move comes after DSM saw its operating profit slump 23 per cent to €294 million last year , hit by higher raw material costs and declining sales of its life sciences products. Group chairman Peter Elverding previously warned that staffing reductions will be a feature of 2004.
The staff cuts are part of DSM's so-called Copernicus restructuring initiative, designed to improve the efficiency of manufacturing and reduce costs by more than €100 million over the next two years. The job losses in Geleen follow a series of similar actions announced in recent months in the US, Germany and Switzerland.
DSM has come under pressure from increasing competition in the market for manufacturing pharmaceutical ingredients from firms. And with fewer new drugs being produced at present, the number of customers for contract active pharmaceutical ingredient (API) manufacture is shrinking.
Approximately 2,400 people work at DSM's Chemelot site in manufacturing operations and in service units that support these operations. The chemicals group will look to outsource some of the culled activities while a manufacturing centre will be set up to coordinate activities such as maintenance, purchasing, security and environmental safety across the various factories at the site.
At present, these functions are too diverse and too fragmented, resulting in high costs and unnecessary dilution of manufacturing expertise, which is having a negative effect on the site's competitiveness. The first phase of the restructuring is due to start before the summer and continue through the rest of 2004.
DSM said it will also look to attract other companies to the site and may cooperate on services with Sabic, the group also using the Chemelot site after acquiring DSM's petrochemicals operations.