Ferromatik Milacron (Malterdingen / Germany; www.ferromatik.com), German subsidiary of US machinery manufacturer Milacron (Cincinnati, Ohio / USA; www.milacron.com), has confirmed plans to cut 200 of the 500 jobs at its main production site in the country. Talks with employee representatives are now in progress. Because of the poor development of its European business, Milacron has introduced a cost saving scheme. According to group CEO John Brown, this is aimed at saving USD 14-15m annually, starting this year.

The German workforce and the country´s metalworkers trade union have harshly criticised the plan, in particular because just over a year ago they approved a restructuring wage agreement and made considerable financial concessions. The sweeping job cuts, which endanger the entire company, will not be accepted without a fight, the employee representatives said. In response to an inquiry from PIE, Ferromatik was unwilling to give an explanation of the statement that it wanted to introduce a "product and market-oriented divisional organisation (…) with capacities being adjusted at the site". The effects of the new structure still had to be established, it said.

In Europe, Milacron evidently has its back to the wall. In presenting sales and earnings figures for 2005, Brown explained that neither the Machinery Technologies segment – which, apart from Ferromatik, also includes the blow moulding machinery manufacturer Uniloy Milacron (www.uniloymilacron.com) – nor the Mould Technologies segment – with the producer of standard mould units DME (www.dmeeu.com) – had managed to operate profitably last year.

One of the reasons for the poor performance, Brown said, was the continuing enormous pressure on prices in Europe, as a result of which (in contrast to North America) increases in materials costs could not be passed on. Apart from that, the order book situation is still poor. Milacron expects costs of USD 20m for the restructuring programme in Europe. Some USD 13m of this already has been budgeted and is thought likely to go for severance packages.

At least the US group does not intend give up on Europe. Asked by a US analyst why Milacron did not part with the business rather than launch yet another restructuring campaign – the third or fourth within a few years – Brown said he thought further attempts to make the European business profitable were well advised.

In 2005, Machinery Technologies Europe posted an operating loss of USD 4.9m, following a profit of USD 1.9m in 2004. Sales fell to USD 150m from USD 167m in 2004. Ferromatik accounts for around two-thirds of this. The value of the European segment´s new orders also slipped, from USD 155m to USD 153m.

Milacron´s overall group sales in 2005 amounted to USD 809m (USD 774m). Half the growth was attributable to price increases, CFO Ross Anderson explained. Around 30% of total sales are with after-market businesses and services. Group net losses fell to USD 14.1m, which was nevertheless a considerable improvement over the USD 51.8m loss in 2004. Excluding one-off charges for restructuring and refinancing, the loss was USD 12.6m, compared with a loss of USD 17.4m in 2004.

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Milacron presentation on Q4 and 2005 sales and earnings as PDF document (69 KB)