Since 2008, Danfoss’ sale of compressors has decreased dramatically. In addition, sales prices are under substantial pressure. As a result of the global crisis, there are no indications that the financial situation will improve in the near future. Consequently, the management sees no other alternative than to take comprehensive measures which will lead to extensive structural changes throughout the business. However, this does not mean the end to the Flensburg site.
“We regret that in spite of the many steps taken we are not able to run a profitable business in Flensburg. The Household Compressors business unit is suffering weekly, financial losses in the millions. We simply cannot afford to proceed without taking drastic action, if we want to avoid this unsustainable situation damaging the entire Group,” says Kim Fausing, Executive Vice President and COO, Danfoss.
In order to improve the financial situation, Danfoss Household Compressors has already implemented numerous initiatives to reduce costs, such as eliminating overtime, introducing work sharing, as well as redundancies in connection with the ongoing restructuring activities. However, none of these initiatives were sufficient to generate a positive outcome.
Danfoss Compressors sees no other alternative than to plan to cease production in Flensburg, among other things, which is expected to result in the relocation of production to China and Slovakia in order to take advantage of the lower cost levels of those countries. The compressor ¬production in Flensburg is part of the Danfoss Household Compressors business unit which employs around 2,800 people worldwide.
Danfoss Compressors has initiated a dialogue with the workers council on the implementation of the plans and, along with the workers council, to support the affected employees in Flensburg.
“We are under pressure and have to make plans to prevent further financial losses. Sales are set to remain at a very low level throughout this year and most likely next year, too. In order to secure Danfoss’ compressor business, we will have to adapt our cost level to the current situation. At the same time, it is imperative that we work hard to launch new, energy-friendly and highly optimised compressor products on the market. These innovative products will help us in the further development of our business,” says Mogens Søholm, Senior Vice President of Danfoss Household Compressors.
The plans do not affect the product and technology development functions, sales and some global support functions at the Danfoss Household Compressors headquarters in Flensburg.
We are very much aware that the planned changes seem drastic, but we hope for appreciation of the fact that this action is solely taken to secure the future of Danfoss Household Compressors.
For further information:
Mogens Søholm, Senior Vice President, Danfoss Household Compressors, tel.: +49 461 4941 500
Kim Fausing, Executive Vice President and COO, Danfoss A/S, tel.: +45 7488 3763