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European bearing manufacturer SKF Group announced it would cut 2,500 jobs as it expands and accelerates its cost reduction program announced in 2010. The program aims to reduce annual costs by SEK 3 billion (US$464.8 million) by 2015.
The program also includes consolidation of production between sites and the transfer of production from Western Europe to Eastern Europe, Asia and Latin American in order to "serve these faster growing markets with more local production," a press release from the company said.
The total cost for the program will be about SEK 1.5 billion (US$232.4 million) for the years 2012 to 2015 and will be recorded as projects are finally approved and implemented during the period. The positions slated for elimination will be targeted primarily through early retirement and other voluntary and agreed reductions.
"Demand weakened as we went through the fourth quarter and we expect it to continue at this lower level at the beginning of this year. Manufacturing was therefore reduced more than planned to reflect this, resulting in inventories being lowered by over SEK 600 million (US$93 million)," President and CEO Tom Johnstone said.
In the fourth quarter 2012, SKF will report restructuring cost of SEK 200 million (US$31 million) as the first step of the program and an additional SEK 100 million for impairments and write down of assets. The annual savings from this first step will be SEK 150 million (US$23.2 million) when fully implemented in the second half of 2013. Some 550 people are affected primarily in Ukraine, Italy, Sweden and the U.S.