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Swedish manufacturer Sandvik has announced a plan to implement SEK 1 billion (US$150 million) in cost-saving measures by the end of 2013, including the reduction of more than 950 employees, the termination of third-party contracts with more than 350 workers and elimination of 180 workers employed by third parties.
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Sandvik Mining will reduce its global employee count by 650, including the closure of business units in North Bay, Canada, and Rocklea, Australia. Nonrecurring charges related to the reduction are estimated at SEK 175 million (US$26.3 million) and will be recognized in the fourth quarter 2012, with a further SEK 175 million (US$26.3 million) recognized in 2013.
Sandvik Machining Solutions will close its Seco Tools U.S. distribution center in Troy, MI, and the distribution center in Kentucky will incorporate Seco Tools products. Combined with other initiatives across the business area, including a headcount reduction in Fagersta, Sweden, structural costs will be reduced by an estimated SEK 150 million (US$22.5 million). The nonrecurring charges associated with these initiatives are expected to impact earnings by just under SEK 100 million ($15 million) in the fourth quarter of 2012 and by SEK 200 million (US$30 million) in 2013.
Sandvik Materials Technology will also focus on consolidations, designed to provide sustainable cost savings of more than SEK 300 million (US$45 million). As part of the ongoing review of the wire business, Sandvik Materials Technology will restructure the wire operations at Sandvik Española in Barcelona, Spain, eliminating 220 positions globally. The fourth quarter 2012 will be impacted by nonrecurring charges of SEK 650 million (US$97.5 million).
Sandvik Construction will reduce employee count by 80, in addition to a further 180 employed by third parties. This will lead to minor nonrecurring charges in the fourth quarter 2012 and total cost reduction of more than SEK 100 million (US$15 million) by year-end 2013.