22 September 2005 Declaration of intent to restructure the Bekaert plants at Hemiksem and Lanklaar
Today, 22 September 2005, at two simultaneous works council meetings, the management announced its intention to restructure the advanced wire production plants at Hemiksem and Lanklaar (Belgium). The action plan that Bekaert is proposing, applies to 85 and 125 jobs respectively. In Hemiksem 65 blue collar workers and 2 white collar workers will be affected, and in Lanklaar 110 blue collar workers and 15 white collar workers.
The management is willing to work out systems, in consultation with representatives of the employees, whereby as many compulsory redundancies as possible are avoided, for example, by way of outplacement programmes, severance pay and the conventional early retirement schemes.
The plant at Hemiksem is faced with an increased pressure on sales prices in Western Europe due to the increasing competition from imports of galvanized low carbon wires into the European Union from countries like Russia, South Africa, Ukraine, China, Israel, Turkey and Romania.
In addition, rising imports of finished products mean that a number of Bekaert’s customers are discontinuing their production activities in Western Europe or moving them to Central Europe and Asia, where they prefer to procure supplies locally. This has had a direct impact on the order book at the Hemiksem plant. Export opportunities from Europe to the rest of the world have also been considerably reduced due to the increasing capacity and competition from non-European players and this has been further reinforced by the current evolution of the exchange rates.
In view of this structural evolution in the market, Bekaert feels obliged to adapt its cost structure and therefore, the company wants to proceed to close down two low carbon wire production lines. This will have consequences for the number of jobs at Hemiksem.
The plant at Lanklaar, which supplies steel cord products for tire reinforcement, is faced with a marked shift in tire production from Western Europe to Central Europe, so that customers increasingly demand to be supplied from Central Europe. Bekaert’s investments in Slovakia, ie the construction of a plant in Sladkovicovo and the acquisition of the Hlohovec plant, fit in this framework and were necessary to secure Bekaert’s future in these markets.
As a result of fierce competition, there has been a further increase in the pressure on sales prices for simple steel cord products in Europe, whilst production costs in Western Europe continue to rise. In addition, exports from Europe to customers in the rest of the world have more or less disappeared due to the construction of local production capacity and evolutions in the exchange rates.
In view of the sharp reduction in profitability, structural measures at the plant in Lanklaar are unavoidable. For this reason, Bekaert intends to use the plant in the future to produce a limited selection of high-quality steel cord products. This will affect the number of jobs, the organisation and the work systems at Lanklaar.
For each of both entities, this announcement marks the start, as foreseen by the law, of the first phase of information and consultation with the social negotiating partners concerning the intended restructuring and the resulting collective redundancy. Negotiations will start subsequently to work out a social plan.
The decision was taken to inform the works councils at the two branches on the same day for reasons of clarity and transparency with regard to the various parties concerned, most importantly the employees.
In Hemiksem, Bekaert, with 382 employees, manufactures low carbon wires for e.g. coat hangers, bucket handles or paint rollers and high carbon wires for e.g. lift, crane, or drilling platform cables.
In Lanklaar, Bekaert, with 277 employees, produces steel cord products for tire reinforcement.