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Household appliances crisis, even the German giant Miele fires

Cost cuts, relocation (in Poland) and reduction of 2,700 employees

By now we are getting used to it: when a company communicates that it has decided to launch a program of "efficiency", with the mind we immediately go to translate that it plans layoffs. Not an exception is an appliance giant like the German Miele, which from the headquarters of Gütersloh, in North Rhine-Westphalia, announced the launch of the Miele Performance Programme which "through growth initiatives and cost reductions" should "generate an overall effect of about 500 million Euro". Translated means: reduction of costs and, therefore, of staff. The reason is always the crisis of the appliance market, the one that is bringing to the brink of the abyss other giants like Electrolux and Whirlpool.

"The Miele Group also suffered from the global collapse in demand for household appliances and the drastic increase in prices on the cost side -explains the German company’s statement. To take long-term countermeasures, a comprehensive programme has been launched to further improve structures, processes and cost items". And so yesterday the direction has announced to the dependent that "within 2026 it will be possible to obtain an ulterior margin of maneuver financial of approximately 500 million Euros. More than two thirds of this room for manoeuvre will be achieved through sales improvements or the reduction of material and personnel costs; however, a substantial reduction in personnel costs is also inevitable. As a result, up to 2,700 jobs could be lost or relocated worldwide. Implementation should be as socially responsible as possible".

"In addition to the end of the exceptional economic situation caused by the coronavirus, the economic consequences of the war in Ukraine have had a particular impact -continues the company’s statement. And unlike previous market slowdowns, this is particularly noticeable in the premium segment. In this context, the preliminary sales of the Miele Group decreased by about 9%: in terms of units sold, the deficit compared to the previous year is about double. There are no signs of an imminent market recovery. At the same time, high inflation is leading to significantly higher purchasing costs, for example for materials and energy, as well as for labor costs".

"What we are experiencing is not a temporary decline in the economy, but a lasting change in the general conditions that concern us, to which we must adapt", said the management of the Miele group in an internal information to employees. " The company will therefore act quickly and decisively to emerge strengthened from this difficult situation". 

The reference framework, say Germany, consists of a group-wide cost and efficiency initiative, called the "Miele Performance Programme", which focuses on structures, processes and cost items in all sectors. " To ensure sustainable profitability -explains the note-, by 2026 an additional financial margin of manoeuvre of about 500 million Euro will have to be exploited, of which more than two thirds will result from improvements in sales and a reduction in material and personnel costs".

"Personnel costs must also be the subject of significant savings -says the company’s statement-, after years of strong growth since 2019 has accumulated a significant amount of skills and additional capabilities. However, adjustments are now inevitable in response to the changed market situation". According to current planning, this could potentially affect up to 2,000 jobs worldwide, mainly in indirect areas, that is, not on production machines and assembly lines. 

In addition, the Laundry business unit is working on an even more customer-oriented product strategy, more effective marketing and a reduction in complexity, in order to combat increasingly fierce competition based on prices. Translated this means that, as the company reports, "for reasons of cost it is inevitable to transfer other parts of the production of washing machines from Gütersloh and the production-related areas, to the Miele plant in Ksawerów, Poland".

"According to negotiations with the workers' representatives -the statement says- it is expected that almost all household washing machines will be assembled in Ksawerów in successive stages until 2027. This would result in the gradual elimination of some 700 jobs at the Gütersloh plant. The remaining parts of the production of household appliances, such as the press department, the foundry and the processing of moulded parts, will not be affected by this measure, but will remain in Gütersloh for the time being. This also applies to the assembly of scrubber driers and small commercial machines".

Adding up the described measures, 2,700 of the current 23,000 jobs would be potentially affected. " These are serious measures and we are aware that this will hit many colleagues hard," says management. " However -adds the note-, this is the only way to lead Miele towards a successful future, as a strong and independent family business, with constant attention to premium products and the necessary profitability in all sectors".

It is not yet clear which areas may be affected by the staff cuts and to what extent, as the details will have to be finalised and negotiated with the social partners in the coming months. In the year of its 125 anniversary, another stated goal is to focus again on growth. 

"Miele, the note concludes, will continue to invest constantly in its strategically important projects. Current examples include the development of new generations of products, the construction of a further plant in the United States, the complete acquisition of the grill specialist Otto Wilde and the planned joint venture with Metall Zug AG to strengthen Miele’s medical technology".

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EFA News - European Food Agency