Evonik plans for cost savings of EUR250 mn/year by 2016

Speciality chemicals firm Evonik Industries has caught the European crisis flu. Days after speciality chemicals firm Lanxess announced steps to shave off expenses by axing jobs and Bayer MaterialScience looking at cost cutting measures, Germany’s Evonik is aiming to reduce administrative costs by EUR250 million a year from 2016. With the restructuring programme, the number of executive board members will be reduced from six to four, thereby also completing the firm’s transition from an industry conglomerate to a listed speciality chemicals group (Evonik made its stock market debut on 25 April).

Within the Executive Board, operational responsibility for the entire speciality chemicals business will therefore be transferred to Patrik Wohlhauser (49) as of January 1, 2014. Dr. Thomas Haeberle (57) and Dr. Dahai Yu (52) will be leaving the company by amicable and mutual agreement effective December 31, 2013.

Evonik says that administrative expenses are now approximately 26% higher than they were in 2008 and it therefore intends to extend the progress made in the operating units with its efficiency enhancement programmes to its administrative organisation. Evonik said that an unspecified number jobs would be cut but that it would not resort to forced redundancies. It will instead adopt an existing agreement with organised labour to refrain from forced redundancies that would be extended by two years until 2018.

Dr Klaus Engel, Chairman of Evonik's Executive Board, explained: "We want to create an administrative organisation that has a common stamp worldwide, without duplication of responsibilities on the one hand and unacceptable additional workloads on the other. To achieve this, we will be reviewing all administrative workflows and systematically identifying scope for improvement. Creating a more efficient Group-wide administrative organisation will also make us faster and more agile in the marketplace."

The firm also said that in many parts of the company the current administrative functions still reflect the needs of the former diversified group, adding that the overhaul would also allow it to react faster to changing market conditions.


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