Photo courtesy of Ledvance
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Seeing Traditional Lighting’s Decline, Ledvance Announces Layoffs in Germany

Nov. 22, 2017
Despite earlier restructuring efforts, Ledvance said that the capacity utilization of its production sites globally is currently only at 20% to 40%.

Ledvance GmbH, Garching, Germany, announced that in the course of continuing its transformation it will reduce its headcount by roughly 1,300 jobs in Germany. The cuts come as the company confronts the decline of traditional lighting it inherited from Osram and plans a shift to high-growth LEDs and smart lighting. In addition to the layoffs in Germany, the company reduced headcount in its Wilmington, MA, U.S. headquarters by 90 positions, according to reports in several lighting industry publications and the online news blog,

Despite earlier restructuring efforts, Ledvance said in a release, the capacity utilization of its production sites globally is currently only at 20% to 40%. Production sites in Germany will be consolidated from four to two, with plants in Berlin and Augsburg to be closed by the end of 2018 and production moved to plants in Eichstätt and Wipperfürth. The company’s mechanical engineering offices in Augsburg is planned to be closed by the end of 2019. The company will also reduce headcount by 100 at its corporate headquarters near Munich.

“With these measures, we are consistently continuing the transformation of our company that began some years ago. The rapidly declining demand for traditional products requires deep cuts in our manufacturing structures and administration. This is the only way we can ensure our future viability. These measures are painful, but urgently necessary. We want to work very closely with the employee representatives and together develop constructive and responsible solutions for the affected employees,” said Jes Munk Hansen, CEO of Ledvance, in the release.

The substitution of traditional lamps with LED is being driven not only by the higher efficiency, longer life spans, and rapidly declining prices of LEDs, but also by legislative initiatives in Europe and several other parts of the world, that not only prohibit the incandescent but also the halogen lamp, the company said. Ledvance expects a decline in market volume for its traditional business by almost 90% by 2025. This development not only impacts the capacity utilization of the production sites, but also the company’s profitability.

“The situation demands quick and above all sustainable action. In addition to the planned measures, we have launched a stringent cost reduction program. In the future, we will focus on high-growth segments, meaning that we will intensively expand our business with LED lamps, integrated LED lamps and smart lighting solutions for example in the segment Smart Home. To reach this goal, we must continue to strengthen our innovation ability and continue to invest in research and development,” Hansen said.